US Dollar / Japanese Yen; Strong Bearish Bias against 96.75

It is possible that the failure of the EURUSD to make a new high while the AUDUSD, NZDUSD, and GBPUSD have made new highs signals a divergence and US dollar bottom. A drop below 1.3858 (yesterday’s low) in the EURUSD would bolster bearish prospects.

Euro / US Dollar

The EURUSD rally from 1.2886 is in 5 waves. Wave 5 slightly exceeded the 1-3 line Friday and price has pulled back and a top could be in place. Coming below 1.3858 would signal that a top is in place. Until then, additional strength is possible.

British Pound / US Dollar

There is no change to the bigger picture pattern in which wave 4 within the 5 wave decline from the 2007 high is nearing completion. Strength has been contained by the top of a parallel channel thus far. The rally from 1.3500 is a complex (w-x-y) correction. Although the rally is extended, there is no sign of a top yet.

Australian Dollar / US Dollar

Nothing has changed regarding long term bearish implications (5 wave decline from 2008 high indicates additional bearish potential and the corrective rally from .6000 confirms as much). RSI divergence along with mature wave structure at multiple degrees of trend (3 waves up from .6000, 5 waves up from .6245 and 5 waves up from .6950) favors a reversal. Like the GBPUSD, there are multiple warning signs that the pair will top but no evidence of a top yet.

New Zealand Dollar / US Dollar

The NZDUSD rally from .5484 is in 5 waves therefore the risk of at least a pullback, to at least .5829, is high. RSI divergence on the daily favors bears as well.

US Dollar / Japanese Yen

The USDJPY is approaching 93.50…a break below there would clear the lowest point of the head and shoulders top that had formed since March. The triangle count is still valid but becoming less probable by the day. At this point, remaining below 96.71 keeps the near term trend pointed down.

US Dollar / Canadian Dollar

Potential support from a line extended from the 4/16 and 5/8 lows indicates reversal potential. Structurally, the decline from 1.3068 is in 7 waves. This decline could be counted in several ways, but the near term implications are bullish for nearly all counts. The decline could be an A-B-C correction that is nearing completion, a double 3 (two flats), or waves 1 through 3 of an impulse. At least a rally back to 1.1820 is expected.

US Dollar / Swiss Franc

The USDCHF has dropped below its March low of 1.1157. Minimum expectations have been met for wave Y. The risk of a bottom and reversal is high.

[I]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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