Dollar Gets Crushed - Pullback Is Due

• Euro Breaks Through 1.3262
• Japanese Yen Triangle
• British Pound At Measured Objective
• Swiss Franc Probes 1.2000
• Canadian Dollar Little Changed
• Australian Dollar Soaring
• New Zealand Dollar Probes Resistance

EURUSD – The break above 1.3262 negated the bearish structure and focus in now on the December high at 1.3370. With 5 waves up from 1.3193, a correction lower is the most likely scenario with support at the 4th wave low at 1.3280. This level is reinforced by the 38.2% of 1.3193-1.3343 at 1.3286. When viewed on a weekly chart, it is possible that the EURUSD is tracing out what is known as a double zigzag pattern from the 1.1640 low. Viewed in this context, a measured objective is at 1.3740 (which is where the 1.2483-1.3370 rally would equal the rally from 1.2866). A bearish outcome is still possible with 1.3370 intact but price is very close to that level.

USDJPY – We mentioned yesterday that “if 118.51 holds, then a triangle may be forming. In order to consolidate the sharp drop from 121.66, a triangle scenario is certainly possible.” It certainly looks as if a triangle is forming with the current decline as the d wave of the triangle. We are looking for the pair to come down to the 116.00 area and rally in the final leg of the triangle before breaking lower and coming under 115.15.

GBPUSD – We said yesterday that “a push above 1.9436 would complete the pattern and give way to a decline that comes under 1.9184. The A and C legs of the correction would be equal at 1.9465 and the 61.8% of 1.9675-1.9184 is at 1.9486. That, level, 1.9465/86 is where we are looking for a top in Cable. The GBPUSD rally extended to 1.9501 and just completed a reverse hammer on the hourly. We like the topping scenario but price must come under 1.9396 in order to confirm that the pair has ‘topped’. If 1.9501 fails as resistance, then the next level to watch is the 78.6% of 1.9675-1.9181 at 1.9569.

USDCHF – We mentioned yesterday that “a 5 wave decline is evident from 1.2357 to 1.2213, meaning that the larger trend is now down.” Like the euro, but in the inverse, there are a clear 5 waves down from 1.2217, so at least a correction is due. Resistance is at the 38.2% of 1.2217-1.2029 at 1.2101 and the confluence of the 50% of 1.2217-1.2029 / wave 4 high at 1.2123.

USDCAD – We are suspending the longer term bearish outlook due to the impulsive rally off of 1.1679. We wrote yesterday that “the fact that this decline has yet to accelerate lower and the bullish divergence with RSI on the hourly are both causes for concern and a bounce to 1.1739 or higher is suggested near term by the 5 waves down from 1.1820.” A small 5 wave rally from 1.1679 to 1.1765 is evident with the chop lower undoubtedly corrective. Price is now likely to exceed 1.1879 is a 3rd wave and target the 1.2000 figure (61.8% of 1.2734-1.0927 at 1.2041) in coming weeks. Then, we will look for the BIG turn lower. Remaining above 1.1679 keeps the outlook intact.

AUDUSD – The AUD/USD has soared past .7950 and focus is now on the 1/3 high at .7982. Daily oscillators are rising but not yet overbought, indicating that this rally may very well extend. The chart below is telling, ultimately, the AUDUSD may be in the verge of breaking above this long term triangle. A break above this triangle, and the psychological .8000 figure could be violent.

NZDUSD – Kiwi’s rally has not been as impressive as the Aussie but the pair is on the verge of breaking through the 3/13 high at .6991. A measured objective lies at .7104, which is where the rally from .6832 would equal the .6720-.6991 rally. This is also just below the 2/26 high at .7126. The bullish outlook remains intact as long as .6833 remains solid (as support).