-EURUSD decline uninspiring...so far
-GBPUSD still bearish against 1.4780
-AUDUSD and NZDUSD head and shoulder tops
-USDJPY tests former daily low at 96
-USDCAD stabilizes above 1.2000

Euro / US Dollar

After calling the wave 2 top weeks ago, the EURUSD has declined over 700 pips but the decline has been less than inspiring. Still, experience has taught me that markets often lull participants to sleep before a big move, which is what may be going on here. Price is below the 200 day SMA (not shown), which is sloping down and right at the 55 day SMA (in blue). Since the March top, the EURUSD has made lower highs and lower lows (see false channel). Staying beneath 1.3303 keeps the downtrend intact although price ideally remains beneath 1.3160. We can't force the market into impulsive action, but an impulse lower is what I am expecting. Beware that the EURJPY pattern warns of a recovery in the EURUSD as well.

British Pound / US Dollar

An expanded flat is complete and the decline from 1.4776 is an impulse, strongly suggesting that the path of least resistance for Cable is lower. I wrote yesterday that a small second wave may be complete at 1.4632. Favor the downside against 1.4776 in anticipation of a break below 1.35. A second wave was not complete at 1.4632 and a push through 1.4698 may even be required before a second wave is complete. Still, stay bearish against 1.4776. The minimum objective is below 1.4513 and below 1.35 is the multi month objective.

Australian Dollar / US Dollar

Bigger picture, a complex correction may be complete from the October 2008 low. A head and shoulders pattern that has formed since late March bolsters the bearish bias. The AUDUSD should stay beneath .7245 on its way below .6765 and eventually .60.

New Zealand Dollar / US Dollar

Bigger picture, there are 5 waves down from that .6090, suggesting that the long term trend remains down. Additionally, an expanded flat correction has unfolded from the February 2 low (.4958). Weakness is favored against .5939. NZDUSD sports a head and shoulders top, although the pattern is not as ‘clean' as the AUDUSD pattern. Still, favor the downside against .5939. Price ideally stays below .5745 but a push above there would not alter the bearish structure.

US Dollar / Japanese Yen

I continue to favor the downside against 98.46. The long term trend remains down and I expect a resumption of that trend. The drop beneath trendline support last week bolsters the bearish case. A short term bearish targets has been hit at 96. The USDJPY is currently testing the low side of a short term channel and intraday studies are divergent and oversold. Bounces should be capped by 97.45. Keep the big picture in mind though; price is below the 200 day SMA (which is sloping down) and RSI not yet oversold. Bearish potential is significant.

US Dollar / Canadian Dollar

The trend remains up as long as price is above 1.1976. Staying above there keeps open the possibility that a wave 4 low is in place within the 5 wave advance from .9055. The USDCAD has shown signs of stabilizing above 1.1976 so favor the upside. The minimum objective is above 1.2510.

US Dollar / Swiss Franc

Like the EURUSD, the USDCHF has most likely resumed its longer term trend towards USD strength. This is my working assumption as long as price is above 1.1350. Price has bounced from a support line drawn off of March and April lows.

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 jsaettele@dailyfx.com