Dollar in Limbo amid Uncertain Directional Bias

With each passing day that the USD fails to rally, a dollar bearish outcome to the recent consolidation becomes more probable. Trend defining levels are clear across the board.

Euro / US Dollar

The bearish count remains valid against 1.4140 but failure to trade lower last week seriously dampens bearish confidence. The ending diagonal count looks more probable at this point. A drop below 1.3983 is possible near term in order to complete a small correction from 1.4118 and the bullish count is valid against 1.3888. Until a break of one of the mentioned levels, the EURUSD is in a state of limbo.

British Pound / US Dollar

The rally from 1.3500, although strong, still counts well as a correction (3 waves). In fact, price reached and reversed at a former 4th wave (common guideline). Although this evidence favors a top and reversal, the GBPUSD has yet to confirm as much. An alternate possibility, in which Cable will trade higher in a 5th wave terminal thrust, is gaining more credibility each passing day.

Australian Dollar / US Dollar

The AUDUSD is similar in that the recent decline is more suggestive of a correction. A bearish outcome is possible as long as price is below .8124 as is a bullish outcome as long as price is above .7789.

New Zealand Dollar / US Dollar

My focus remains on the longer term structure, especially the rally from .4890, which is a textbook zigzag. Waves A and C are equal (and price reversed at the 50% retracement of the decline from .8219), which is common. However, the uneasy sentiment remains here since the recent decline is more corrective than impulsive.

US Dollar / Japanese Yen

The triangle continues to play out but there is an alternate bearish count in which the drop from 101.50 is a series of 1st and 2nd waves. 93.50 defines the trend (above is bullish and below is bearish).

US Dollar / Canadian Dollar

Near term, a head and shoulders top could be forming. A break below 1.1417 would confirm the top and expose Fibonacci support at 1.1300.

US Dollar / Swiss Franc

The surge to 1.1000 in the USDCHF may have completed a 4th wave correction (like the EURUSD). As such, a drop below 1.0589 and then 1.0367 in wave 5 would complete an A-B-C correction that began in 2008. Near term, a pop above 1.0911 could complete a small correction of the decline from 1.1020.

[I]Jamie Saettele publishes Daily Technicals every weekday morning (930 am EST), COT analysis (published Monday mornings), technical analysis of currency crosses throughout the week (EUR on Tuesday, JPY on Wednesday, GBP on Thursday, AUD on Friday), and the DFX Trend Index every day after the NY close. He is also the author of Sentiment in the Forex Market.

Please send comments about this report to <[email protected]>[/I]