US Dollar Vulnerable in Short Term

  • EURUSD resistance above 1.3940
  • GBPUSD could rally back to 1.6300
  • AUDUSD near multi month range low
  • USDCAD vulnerable to at least 1.1400

Euro / US Dollar

Until a break below 1.3747, there are numerous competing counts, including a triangle count as wave 4 within a diagonal from 1.2454. Bigger picture, I do expect weakness in the EURUSD but I’m not sure whether or not that decline occurs from here or after one more rally (above 1.4720). At this point, the bearish count shown above is valid against 1.4057. Near term, the EURUSD may complete a small correction with a rally above 1.3940.

British Pound / US Dollar

The rally from 1.5800 counts best as a 3 wave rally and 3 wave rallies occur in B or X wave positions, diagonals, and triangles. All of these are possible right now. The decline from 1.6750 can be counted as a 5 (impulse), which favors the expanded flat count in which the GBPUSD will eventually drop below 1.5800. In this case, the leg lower from 1.6750 would be wave i or a (complex). There is the risk of a rally back to at least 1.6300 in order to correct the decline from 1.6750 (RSI divergence favors this interpretation).

Australian Dollar / US Dollar

Similar to the EURUSD, the AUDUSD remains in a range but a bearish count is valid as long as price is below .8044. Until a break below .7786, bullish potential remains (potential inverse head and shoulders pattern is evident as well…which is bullish). I wrote yesterday that “a top and reversal is expected before .8162.” Bears should sit tight against .8044. Understand that confidence in direction is low until a break.

New Zealand Dollar / US Dollar

The short term NZDUSD pattern is the same as the short term AUDUSD pattern. Only a break below .6150 would inspire confidence in the downside. A bearish count is valid against .6555 as there are 5 waves down from that level.

US Dollar / Japanese Yen

The triangle continues to play out but there is an alternate bearish count in which the drop from 101.50 is a series of 1st and 2nd waves. 93.50 defines the trend (above is bullish and below is bearish). There is little else to say about the USDJPY at this point. One can not force analysis upon choppy, unclear market structure. Sometimes (this is that time), the correct decision is to do nothing and await clarity.

US Dollar / Canadian Dollar

The extent of the rally from 1.0782 almost assures that the entire decline from 1.3068 is complete. Additionally, the rally from 1.0782 has unfolded as an impulse. The count above (5 waves up that ended in a diagonal) along with RSI divergence favors a corrective decline prior to the next bull leg. Resistance begins at 1.1417.

US Dollar / Swiss Franc

The USDCHF is still stuck in its 1.06-1.10 range. We are left with competing counts, shown with labels above, until a break of the range. If the trend has turned up, then 1.0700 should remain intact.

[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.

Please send comments about this report to <[email protected]>[/I]