As long as the EURUSD is below 1.5699, the USD bull trend is considered intact and the probability that the USD advance accelerates is high.
The drop below 1.5521 this morning makes it highly likely that the EURUSD is headed lower and quickly. One of the counts that we proposed yesterday was “wave 3 of C is underway from 1.5768. If correct, price will remain below there.” The objective is not until below 1.5283. The pair has also broken below trendline support that has held since August 2007. Price should remain below 1.5699 going forward.
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The USDJPY remains choppy. To review, the rally from 95.72 is in 3 waves but so too is the decline from 108.57. Short term, weakness may continue in either wave c of a triangle (red letters) or in a small 2nd wave that serves to correct the advance from 103.76. Potential support is in the 106.00/50 zone as well as the 6/30 low at 104.99. Strategically, the best play is a playing bullish break through 108.57, against 106.06.
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There is no change to the near term GBPUSD bearish outlook. “It is likely that wave D of the triangle is underway towards 1.9550/1.96. This is our stance as long as price is below 2.0075.” Price should remain below 1.9928.
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We’ve altered the count slightly. To review; “under the preferred count, the 3 wave rally from .9647 was wave W in a complex correction. The choppy decline from above 1.06 serves as wave X and wave Y is underway now. Expect the advance to reach 1.10 (former 4th wave and wave Y = wave W at 1.0986).” The advance from 1.0010 is now viewed as a series of 1st and 2nd waves (the inverse of the EURUSD from 1.6039). Expect strength to continue with 1.0403 remaining intact. The objective is near 1.10 (Fibo measurement is at 1.0986).
The USDCAD is preparing to break out from its 6 month triangle. This bullish break will complete a 3 wave corrective advance from .9055. Objectives are in the 1.05-1.08 zone. We’ll look to identify support and lessen risk as the advance matures. A pullback to 1.0212 would present an opportunity to add to longs.
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Weakness shows no signs of reversing. In fact, the count above suggests that the AUDUSD drop will accelerate and reach .90/.91 (Fibo extension at .9070) relatively soon. Price should remain below .9475.
The NZDUSD has entered a long term decline. Our longer term objective is not until below .5927. However, there will be countertrend movements along the way. We’ll look to identify completion of those rallies and take advantage of the current downtrend. As of now, price should remain below .7467. Objectives are at .6990 and .6823. Reinforcing the bearish bias is today’s break below the trendline that had held since June 2006.
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