The EURCAD, EURAUD, and EURNZD are all trading at 2009 lows. Momentum divergence suggests that traders be on the lookout for lows and reversals. The EURGBP looks constructive.
Euro / British Pound
The EURGBP appears to have completed a correction from the December 2008 top. The structure of the decline since then is not especially clear, which is the first sign that the pair in question is stuck in some sort of correction. If the interpretation of the wave count above is correct, then the EURGBP should retrace most of its decline.
Euro / Swiss Franc
Since the October 2008 low, the EURCHF has traded in a contracting range that will probably end up as a triangle. Triangles are continuation patterns and the prior trend was down, so expect a break lower eventually. It is possible that the rally to 1.5387 completed wave e of the triangle. Coming under 1.5000 would reinforce this view.
Euro / Canadian Dollar
The larger trend is down against 1.6335 as suggested by the series of lower lows and lower highs since the December 2008 high above 1.7500. Intraday momentum studies are divergent with the recent low, which warns of a bounce. Former support between 1.5600 and 1.5680 is potential resistance.
Euro / Australian Dollar
The EURAUD is trading at its lowest level since September 2008. Look for signs of a bottom in the coming days though as daily RSI is divergent with the new low. 1.6800 is a potential support level.
Euro / New Zealand Dollar
I have maintained in recent weeks that “the decline from the February high is nearing and end as a 5th wave diagonal. Expectations are for a recovery back to 2.3600 (full retracement of the diagonal). Reversals from diagonals can be sharp.” After several false bottoms, the EURNZD is again at a new 2009 low. The pair remains at risk of a sharp reversal for the mentioned reasons (5 waves down, wave 5 is a diagonal, and RSI divergence).
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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]