Dollar Weakness Likely Continues this Week

-EURUSD risk moved to 1.2830, minimum target still 1.33
-GBPUSD risk moved to 1.3880, minimum target above 1.50
-AUDUSD risk moved to .6520
-NZDUSD target at .54
-USDJPY may be topping
-USDCAD tests Fibonacci / trendline support

Euro / US Dollar[/B]

Now approaching the February high of 1.31, the EURUSD rally is expected to accelerate, ideally with price above 1.2832. As I’ve mentioned in recent weeks, the decline from 1.3333 was a diagonal which completed 5 waves down from 1.4723. Diagonals are usually fully retraced, and quickly. A deeper correction of the decline from 1.4723 could reach 1.38, although that would probably take at least a month. Bulls can move risk to 1.2830 and there is short term support at 1.2950/90.

British Pound / US Dollar[/B]

A B wave low is in place for the GBPUSD. I wrote last week that “wave B is in 3 waves and waves a and c of B are roughly equal (a common occurrence).” The pair has worked higher from 1.3650 and price is testing the top side of the channel that contains the B wave. Expect a break higher. The minimum objective is above 1.50 (wave B origin). Bulls can move risk to 1.3880 and there is short term support at 1.4070.

Australian Dollar / US Dollar[/B]

It is probable that a flat is underway in the AUDUSD as a complex W-X-Y pattern that will end above .7275. The AUDUSD has cleared the resistance line drawn off of the January 7th and February 9th high, which bolsters the bullish bias. Bulls can move risk to .6520

New Zealand Dollar / US Dollar[/B]

Bigger picture, the decline from .6090 is in 5 waves. Therefore, at least a 3 wave correction back to .5457 is underway. The bullish target zone / potential topping area for the NZDUSD would be primarily between .5457 (former 4th wave and 50% retracement) and .56 (61.8% retracement). Bulls can move risk to .5140 but place a limit to take profit at .54. The short term pattern indicates that the probability of a drop back to .52 is increasing.

US Dollar / Japanese Yen[/B]

I wrote last week that “a drop below Elliott channel support would begin to suggest that a top is in place. That line is at 97 today.” The key word in that phrase is ‘begin’. At this point, there are only 3 waves down from the top so a top can not be confirmed. Coming under 97.11 would be evidence that a top is in place. Until then, it is possible that price exceeds 99.72 and tests Fibonacci resistance at 101.

US Dollar / Canadian Dollar[/B]

Longer term, if the USDCAD is breaking higher in an impulse as a terminal thrust from a triangle (that had been underway since October), then price needs to remain above 1.2348. Right now, the USDCAD is testing the 61.8% of 1.2348-1.3068 at 1.2618, which is reinforced by a short term support line.

US Dollar / Swiss Franc[/B]

“The fact that a diagonal from 1.13 has not yet been fully retraced makes me skeptical of this move. One possible outcome is an A-B-C flat…wave C would end below 1.1430. I’ll post alerts if I see a short opportunity.”

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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