US Dollar Supported by Short Term Fibonacci Levels

The EURUSD, USDCHF, USDJPY, and GBPJPY have reversed at 61.8% retracements of their prior impulsive moves. The GBPUSD rally, corrective to this point, has found resistance at former congestion. The NZDUSD may be completing its rally as an ending diagonal.

Euro / US Dollar

The EURUSD has run into Fibonacci resistance in what may be a wave 2 top. As focused on in recent days, the common topping area for 2nd waves is between the former 4th wave extreme and the 61.8% of the first wave decline. The EURUSD has reversed from the top of this zone. Favor the downside against last week’s high (1.4450).

British Pound / US Dollar

The decline from the top is most likely a first wave. I wrote yesterday that “a second wave correction is underway now and could reach as high 1.6700/1.6800 (Fibonacci resistance).” The decline could still extend upwards of 1.6795/1.6837 (see explanation for topping zone under EURUSD), but the rally from 1.6388 is in 3 waves to this point (corrective). Reward/risk is not as high here as for the EURUSD.

Australian Dollar / US Dollar

The AUDUSD has broken above its June high, confirming that wave C (as well as the entire rally from the October low) is in its final stages. We have yet to see the degree of weakness from the top that is evident in the EURUSD and GBPUSD but RSI divergence as well as the patterns in the EURUSD and GBPUSD do warn of a reversal. The short term pattern is not clear, but the NZDUSD sheds some light on what might be going on.

New Zealand Dollar / US Dollar

Bigger picture, the NZDUSD is in the same position as the AUDUSD. The break to a 2009 high indicates that wave v of C is underway and nearing completion. The rally from .6193 (wave 5) may be unfolding as a diagonal. If this is the case, then price will poke above .6823 prior to reversing.

US Dollar / Japanese Yen

The USDJPY has been violent lately - moving quickly in both directions. Last week’s spike has nearly been entirely retraced. The decline from 97.81 is impulsive, suggesting that the trend is indeed down. After reversing from Fibonacci resistance yesterday, favor the downside.

US Dollar / Canadian Dollar

The entire rally from 1.0782 has now been retraced. However, the drop below 1.0782 may be wave Y in a complex W-X-Y corrective decline from 1.3068. Daily RSI has turned up from oversold (which was also divergent with the low). The USDCAD rally has picked up steam and cleared initial resistance at 1.0940. The advance has the characteristics of an impulse sand the decline has stalled at the 61.8% of the rally. If the USDCAD is to turn up, then this is a good place for it to do so.

US Dollar / Swiss Franc

The USDCHF pattern is the same as the EURUSD pattern (but as the inverse). Wave C within the A-B-C corrective decline from 1.2303 may be truncated and therefore complete. Trading above 1.0939 would confirm the reversal. Near term, the rally from 1.0561 confirms a reversal (5 waves). Similar to the EURUSD, the corrective move reversed at the 61.8% of the impulse.

British Pound / Japanese Yen

After breaking below a support line and testing 156.00, the GBPJPY reversed violently after testing the 61.8% of the decline from 163.15. A close look at the rally from 155.96 reveals that the advance is in 3 waves as well (corrective). Favor the downside.

[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. Follow his intraday market commentary at DailyFX Forex Stream.

If you wish to receive Jamie’s reports via e-mail, then request so at <[email protected]>.[/I]