The US dollar has rallied from near its 2009 lows against its counterparts in what may be the early stages of a reversal. The high level of USD bearish sentiment suggests as much.

Euro / US Dollar

DTB8-26-09

Weakness from the top of the range may still be corrective but there is an alternate bearish count in which the rally to 1.4380 is wave C of an expanded flat. Given the sentiment of the day - which is extremely USD bearish - this count deserves full attention (markets reverse at sentiment extremes). The downside is favored until at least 1.4172 (61.8% of 1.4044-1.4380 rally) - although it is possible that the longer term trend has reversed.

British Pound / US Dollar

DTC8-26-09

Focus is on 2 counts - an ending diagonal from 1.58 or an impulsive decline from above 1.7000. The bearish count is strong against 1.6629 and there is potential at 1.6240/70. Look to sell rallies into this level.

Australian Dollar / US Dollar

DTD8-26-09

As the AUDUSD nears its 2009 high, the bearish short term pattern has been called into question yet remained valid. A drop below .8151 would negate any bullish potential and open up a move to .7700.

New Zealand Dollar / US Dollar

DTE8-26-09

Coming under .6640 would negate the blow-off top scenario that I have discussed in recent days and also mean that channel support (since March) has been broken. RSI divergence at multiple degrees of trend favor bears.

US Dollar / Japanese Yen

DTF8-26-09

After a false break through channel resistance, the USDJPY is back below both the 55 and 200 day moving averages. The pair has failed at the 38.2% of the decline from 97.81 and Fibonacci resistance extends to 96.13. I like the idea of selling rallies with stops above 97.81.

US Dollar / Canadian Dollar

DTG8-26-09

The USDCAD rally from 1.0631 is in 3 waves (an expanded flat also a possibility - like the EURUSD). A break to a new low would expose a Fibonacci extension at 1.0317, the 78.6% retracement at .9914 and the 100% extension of the 1.3068-1.0782 decline at .9444. This level intersects a potential channel line at the end of September. 1.0950 is resistance. However, the mentioned expanded flat count is valid and gives scope to additional strength through 1.1130.

US Dollar / Swiss Franc

DTH8-26-09

The USDCHF is in a similar situation to the EURUSD. Failure to stay above 1.0561 suggests that the USDCHF is headed for a test of the December 2008 low at 1.0367. However, the decline has failed to accelerate so wave C from 1.1973 may be complete. A rally above channel resistance would confirm a low.

British Pound / Japanese Yen

DTI8-26-09

A support line is giving way and a break below the daily lows near 153.50 would expose the July low below 147.00. The short term bearish bias is valid against yesterday's high of 155.60.

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) 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. Contact Jamie at jsaettele@dailyfx.com