Euro Crosses Continue Corrections


Commentary - The advance from 149.25 is most likely large wave B (or the first part of large wave B) in a larger complex A-B-C correction from 168.94. The reversal area is 161.42/164.73, which is the 61.8% to 78.6% of 168.94-149.25. Looking at the two legs of a cross can help in identifying potential important levels as well. The EURUSD 1.3750 is a Fibo confluence as is the USDJPY 117.90. This works out to 162.11 in EURJPY, which is in the middle of our Fibo reversal zone.
Strategy - Flat (look for a top near 162.11)

Commentary - We wrote last week that “the EURCHF is sitting right at the support line drawn off of the May 2006 and March 2007 lows. A daily close below the line would strengthen the bearish case.” The pair never closed below that line (as evidenced on the chart above) and the EURCHF has enjoyed a sizeable rally. Potential resistance is at the 61.8% of 1.6686-1.6175 at 1.6491. We are looking for another bearish leg, especially given the possibility that the EURUSD will top around 1.3750 and that the USDCHF will thrust lower from a longer term triangle.
Strategy - Flat

Commentary - The EURGBP has been stuck in a correction since mid-March and it looks like the correction will continue for at least a few more weeks as the rally from .6679 is not impulsive. The choppy rally gives scope to a drop below .6679 before a long standing bottom forms. Reversal points are at .6662 and .6606 (61.8% and 78.6% of .6535-.6867). Still, there is little doubt that the pair is headed much higher in coming months (as the rally is clearly impulsive and the decline corrective).
Strategy - Flat