Dollar Under Pressure; Key Levels in Jeopardy

-EURUSD threatening top of channel
-GBPUSD Fibonacci resistance above 1.48
-AUDUSD and NZDUSD head and shoulders patterns
-USDCAD threatens key low
-USDCHF support line failing

Euro / US Dollar[/B]

Since the March top, the EURUSD has made lower highs and lower lows (see false channel). Staying beneath 1.3303 keeps the series of lower highs intact, which is in serious jeopardy of giving way right now. A push through 1.3400 would strongly suggest that the alternate scenario; a complex correction that will end above 1.3740, is underway.

British Pound / US Dollar[/B]

Bigger picture, a flat may be complete at 1.5072, strongly suggesting that the path of least resistance for Cable is lower. I wrote yesterday to “stay bearish against 1.4776. The minimum objective is below 1.4513 and below 1.35 is the multi month objective.” 1.4776 was taken out, which negates the short term bearish bias. Focus is now on potential resistance from Fibonacci at 1.4838. A daily high from early April at 1.4962 is also potential resistance (notice the head and shoulders look).

Australian Dollar / US Dollar[/B]

“Bigger picture, a complex correction may be complete from the October 2008 low.” A head and shoulders pattern that has formed since late March bolsters the bearish bias. The AUDUSD should stay beneath .7245 on its way below .6765 and eventually .60.

New Zealand Dollar / US Dollar[/B]

“Bigger picture, there are 5 waves down from that .6090, suggesting that the long term trend remains down. Additionally, an expanded flat correction has unfolded from the February 2 low (.4958). Weakness is favored against .5939.” NZDUSD sports a head and shoulders top, although the pattern is not as ‘clean’ as the AUDUSD pattern. Still, favor the downside against .5939. Price ideally stays below .5745 but a push above there would not alter the bearish structure.

US Dollar / Japanese Yen[/B]

I continue to favor the downside against 98.46. The long term trend remains down and I expect a resumption of that trend. The drop beneath trendline support last week bolsters the bearish case. A short term bearish target has been hit at 96. The USDJPY has bounced from the low side of a short term channel and resistance is at 97.45. Keep the big picture in mind; price is below the 200 day SMA (which is sloping down) and RSI is not yet oversold. Bearish potential is significant.

US Dollar / Canadian Dollar[/B]

“The trend remains up as long as price is above 1.1976. Staying above there keeps open the possibility that a wave 4 low is in place within the 5 wave advance from .9055.” The minimum objective is above 1.2510. The bullish bias is in serious jeopardy as the USDCAD tests 1.2000 now. A drop below 1.1976 shifts focus to the 200 day SMA, at 1.1840.

US Dollar / Swiss Franc[/B]

Like the EURUSD, the USDCHF has most likely resumed its longer term trend towards USD strength. This is my working assumption as long as price is above 1.1350. A support line drawn off of March and April lows is failing today. Coming under 1.1300 opens up the door for a drop beneath the March low and a test of Fibonacci support at 1.0925. The 200 day SMA is at current price.

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.

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