Dollar weakness in the overnight session was met with strong opposition and majors are little changed on a net basis as a result. Keep in mind that this is also the final day of the month, which sometimes produce wild senseless swings.
Euro / US Dollar
I wrote yesterday that the EURUSD is testing short term channel support. A daily close below the line would increase confidence in the bearish bias and expose 1.4450. Price should stay below 1.4650 at this point. The line held and the EURUSD spiked through 1.4650 and tested 1.4680 resistance. With channel support holding, the midline/former congestion zone in the 1.4720/40 zone is now resistance. Coming under the channel would set sights back on 1.4450.
British Pound / US Dollar
Former support held as resistance (1.6111). I wrote yesterday to watch for resistance at the top of a potential channel as well (drawn a line across recent lows and extend a parallel from the 9/23 high in order to construct this line). That line held and the GBPUSD remains on a path lower.
Australian Dollar / US Dollar
The AUDUSD broke to a new high and levels to keep in mind that could produce reversals are .8950 and .9030. .8950 is a former support level and .9030 is the 78.6% retracement of the decline from the 2008 high.
New Zealand Dollar / US Dollar
NZDUSD price action since its 2009 high has been choppy. The topline of a channel since July and the midline of a channel since March rejected the NZDUSD advance but the NZDUSD has yet to come off much. Coming under .7100 would probably induce selling pressure and send the pair to .6900. Until then, the waters are murky.
US Dollar / Japanese Yen
Former support has held as resistance in the USDJPY thus far. While the trend is bearish below 91.65, the strength of the rally from channel support warrants consideration that a more important low is in place. Trading above the short term resistance line extended from the 9/21 and 9/24 highs would be a sign that something more constructive is taking place. For this reason, move risk on shorts to 90.50.
US Dollar / Canadian Dollar
Maintain a bullish bias above 1.0650. The rally from 1.0588 could be a series of 1st and 2nd waves. This count is extremely bullish and gives scope to an extended rally from current price.
US Dollar / Swiss Franc
The USDCHF daily wave count warns (and has been warning) of a significant low. I wrote yesterday that trading through the top of short term channel resistance would be a sign that a low is in place. The USDCHF has broken through the line, so favor the upside.
Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Monday mornings), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates. He is the author of Sentiment in the Forex Market. Follow his intraday market commentary at DailyFX Forex Stream.
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