Short term patterns suggest that a brief US dollar rally is likely following last week's breakout prior to additional losses for the greenback.
Euro / US Dollar
Last week's break above 1.4340 confirmed that wave v of C is underway towards 1.4720. Near term, a setback into the 1.4200-1.4300 zone (structural support) would warrant bullish action against 1.4000.
British Pound / US Dollar
Cable's consolidation since the beginning of June is not as clear as the EURUSD triangle. In fact, the pattern could have been an irregular flat in which wave b exceeds the origin of wave a and wave c fails to extend beyond the origin of wave b. In any case, the GBPUSD should make its way higher as the EURUSD extends above 1.4720. The next measured objective is 1.7250. 1.6680-1.6780 is support.
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. The AUDUSD may extend as high as the channel resistance line over the next several weeks. Only a decline below .8120 would suggest that a top is in place.
New Zealand Dollar / US Dollar
The NZDUSD is in the same position as the AUDUSD. The break to a 2009 high indicates that wave v of C is underway. Although anticipating a reversal, there is no evidence of one yet. Potential resistance is at .6958. Only a drop below .6467 would suggest that a top is in place.
US Dollar / Japanese Yen
The drop below 93.50 eliminates the bullish triangle count and leaves us with the bearish count in which the decline from 101.50 is a series of 1st and 2nd waves. The USDJPY has traded through the day SMA (95.22 today), and focus is now on channel resistance, which is at 96.45 today and decreases about 5 pips per day. Bears remain favored against 97.00.
US Dollar / Canadian Dollar
The entire rally from 1.0782 has now been retraced. Additional weakness is expected over the next several weeks in order to complete the decline from 1.1730 and by extension the entire decline from 1.3068. 1.0588 is the next level of potential support (Fibonacci). Near term, favor strength to at least 1.0935 in order to correct the decline from 1.1730.
US Dollar / Swiss Franc
Sticking with the USD bearish count, expectations over the next several weeks are for a thrust lower that ends below 1.0367. Bears are favored against 1.0939 and 1.0037 is a potential target (100% extension of 1.2303-1.0367). 1.0738 is potential resistance.
British Pound / Japanese Yen
The underside of a former support line is now serving as resistance as the GBPJPY approaches the June high of 162.64. A break above the line is expected eventually since the decline from that level is in just 3 waves. Initial support is 159.00 (38.2% of rally from 153.84).
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.
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