The dollar has finally regained some ground. It's too early to tell, but the strength could be the beginning of a significant reversal. The GBPUSD is testing h&s neckline support.
Euro / US Dollar
I wrote Friday that the recent break was from a triangle and triangles preceded terminal moves. The rally from 1.4500 appears to be unfolding as a diagonal and may be complete. Even so, one more high would probably complete the rally. Watch 1.4850. The degree of weakness from 1.4772 brings forth the possibility that a larger bear move is underway. Aggressive traders may wish to go short but should keep risk to 1.4750. 1.4675 is potential resistance. It often does take several attempts when catching a turn though. More risk averse should wait for additional pattern development before entering into commitments.
British Pound / US Dollar
The short side has worked well and the GBPUSD is now testing neckline support from the multi month head and shoulders top. Short term traders should take profits if the pair fails to close below neckline today. A reaction would probably encounter resistance in the 1.6285-1.6320 area. Risk on open shorts should be kept to 1.6450 (price should remain below 1.6400 in the event that a larger drop is underway).
Australian Dollar / US Dollar
The AUDUSD continues to work higher towards the 78.6% of the decline from .9856-.6007, which is .9032. This level intersects with a potential resistance line on September 24. I wrote Friday that it is possible that the rally from .7700 is an ending diagonal and that wave iv of that diagonal is underway towards .8476. The pattern is playing out thus far. There may be some support at .8539. .8650/85 is short term resistance.
New Zealand Dollar / US Dollar
Short term structure is not clear but as I wrote Friday, Kiwi is top heavy. The bearish implications from the AUDUSD pattern extend to the NZDUSD as well. .7070 is potential short term resistance and .6900 is support. A push to a new high would expose .7250. This is where the rally from .6193 would be equal to 61.8% of the .4890-.6601 rally. The level also rests in between 2 prominent former pivots (.7222 and .7384). There is also an interesting longer term development.
US Dollar / Japanese Yen
Keep the long term outlook in perspective - a 4th triangle ended in 2007 above 124.00 therefore the decline from that level is viewed as a 5th wave that will not be considered complete until price drops to an all-time low (below the 1995 low near 80). The USDJPY has soared through trendline resistance and is focus is now on 93.41. 91.90 and 91.70 are now supports.
US Dollar / Canadian Dollar
Barring a break above the resistance line, the USDCAD is vulnerable to a drop towards 1.0330 - which has been both support and resistance over the last several years. This level is also the 61.8% extension of the 1.3068-1.0782 decline (from 1.1730). Thus far, the 61.8% retracement of the rally from .9055 has held. The circled area could be a triangle, in which event the immediate move is higher towards 1.1100.
US Dollar / Swiss Franc
The print below 1.0367 (December 2008 low) satisfies the minimum requirement for wave v of C. Divergence with momentum on nearly all time frames warns of a sharp turn against the Franc. The pair has turned up, at least for now. It would take a rally through 1.0526/channel resistance in order to proclaim with confidence that a low is in place.
Jamie Saettele publishes Daily Technicals every weekday morning (930 am EST), 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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