A breakdown in the US dollar is possible this week as ranges are being put to the test. Look to sell US dollar rallies.
Euro / US Dollar
A 4th wave triangle is complete and expectations are for an upside break through 1.4340 and then 1.4720. The move may occur with 1.4118 remaining intact, which is where a small second wave could be complete. Failure to hold that level would expose potential Fibonacci support at 1.4030.
British Pound / US Dollar
A triangle may also be complete in the GBPUSD, although structure is not as clear as that of the EURUSD. With this in mind, the pair remains vulnerable to a drop below 1.6260 prior to breaking out. 1.6030 is the bullish line in the sand.
Australian Dollar / US Dollar
The AUDUSD has come within pips of breaking above its June high of .8269. The rally from .7698 is viewed as a 5th wave (of a larger C wave) that will complete the rally from the October 2008 low. .8385 (61.8% of the decline from .9856) is a level to watch as potential resistance.
New Zealand Dollar / US Dollar
The NZDUSD has exceeded its 2009 high of .6601. Expect additional strength over the next several weeks (at least) to complete the rally from below .50. .6950 (pivot high from September 2008) is potential resistance. Short term structure is not clear but there is no evidence of a top.
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 is resisted by the 200 day SMA (95.22 today). Bears are 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, the USDCAD may stage a rally back to 1.1115 as short term momentum indicators are divergent with the latest lows.
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. 1.0037 is a potential target (100% extension of 1.2303-1.0367).
British Pound / Japanese Yen
The GBPJPY is attempting a break of a line drawn off of the June 12, June 30, and July 23 highs. Although there is the risk of a pullback near term (possibly below 155.15), bulls are favored above 152.30.
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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