Dollar Probes Resistance - Looks to Break Out

  • Euro Dips Below Prior Week?s Low
  • Japanese Yen Probes Support (USDJPY Resistance)
  • British Pound Holding Below Trendline
  • Swiss Franc Right at Trendline
  • Canadian Dollar Remains Bid
  • Australian Dollar 10/20 day SMA Bearish Crossover
  • New Zealand Dollar Breaks .7348 Support

EURUSD - The decline (although brief) below last week?s low at 1.3541 is additional evidence that at least a temporary top is in place. A weekly close below 1.3541 would be more convincing (and the 20 day SMA is at 1.3559?which is giving way). Even if the decline from the top is just a correction, it is likely that the decline extends to the 100% extension of 1.3677-1.3559 / 1.3622 at 1.3504. A break below there exposes the 161.8% extension at 1.3431. 1.3622 is resistance and needs to remain intact in order to keep the bearish structure intact.

USDJPY - The USDJPY has chopped higher in quiet trading. Resistance is at the 78.6% of 122.17-115.14 at 120.67. A potential resistance line drawn off of the 3/12 and 4/16 highs is near 120.60 as well. Bigger picture, the entire rally from 115.14 takes on a wedge shape, which is a bearish pattern. We are looking for the USDJPY to chop higher to 120.50/67 - after which reward/risk will favor shorts.

GBPUSD - Cable has come under trendline support and is hovering near last week?s low (1.9864). The 100% extension of 2.0131-1.9864 / 2.0071 at 1.9804 is a measured objective following a break under 1.9864. A decline much below there targets the 161.8% extension at 1.9639. A decline to 1.9804 or 1.9639 could be the C wave in an A-B-C decline from the top. Yesterday?s high at 1.9945 is rewsistnce. The pair closed below the 20 day SMA yesterday, which bolsters the bearish outlook.

USDCHF - As mentioned yesterday, “the longer term wave structure is bullish as the decline from 1.2571 is a double zigzag (inverse of the EURUSD rally). A longer term inverse head and shoulders pattern (May 2006, December 2006, April 2007) is also visible.” Still, a break above the trendline drawn off of the 2/12 and 4/9 highs is required to clear the way for higher prices. The USDCHF is pressing against this trendline again this morning and looks poised to break higher. Rallying through 1.2187 (5/2 high) would be a bullish signal.

USDCAD - The USDCAD is unchanged from yesterday. “There is little doubt that the decline from 1.1825 is a 3rd wave. Therefore, any rally should be treated like a correction as a 5th wave decline will eventually take the USDCAD to lower levels. Initial resistance is the 4/24 high at 1.1246. With RSI putting in a momentum extreme on 4/25 at 19.91 (daily), downside potential looks limited as the next few weeks may be dominated by sideways/corrective trading in order to correct the oversold condition (daily). The next support level is the 9/01/2006 low at 1.1028 followed by the 261.8% extension of wave 1 (1.1879-1.1562) - at 1.1000.”

AUDUSD - The AUDUSD has come under the 20 day SMA and broken below last week?s low (as well as the .8200 figure) and a bearish 10/20 day SMA cross is taking place today. Former support from the 5/2 low at .8218 is now resistance. The next potential support level is the 38.2% of .7678-.8390 at .8118. .8103 is the 161.8% extension of .8390-.8233 / .8357.

NZDUSD - We have remained bearish and rightly so as the Kiwi has also broken below the confluence of its weekly low / 20 day SMA. There is potential support from the 100% extension of .7484-.7348 / .7445 at .7309 (a level reinforced by the 4/10 high at .7413). Short term resistance is at .7398 and the bearish case is strong below there.