The EURUSD triangle that has been underway since June remains the key consideration in forecasting US dollar direction. If the triangle interpretation is correct, then a brief period of dollar strength should be followed by a breakout to new 2009 lows.
Euro / US Dollar
A 4th wave triangle is complete and expectations are for an upside break through 1.4340 and then 1.4720. I wrote Tuesday that failure ahead of 1.4340 suggests that wave i of 5 (of C) may be complete. A small second wave could reach 1.4035/85 (Fibonacci support) before the advance continues. As such, short term traders may wish to trade from the short side the next several days. Longer term traders should wait for a better buying opportunity. That second wave should be close to complete. There is potential support at 1.3970 and just above 1.3900 (support line and Fibonacci extension).
British Pound / US Dollar
A triangle is nearing completion in the GBPUSD. In fact, a triangle may be complete at 1.6337. The rally from there is sharp and has the characteristics of an impulse. There is potential short term support from Fibonacci at 1.6411. Coming beneath 1.6337 would expose 1.6260.
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 near completion. .8385 (61.8% of the decline from .9856) is a level to watch as potential resistance. Near term, there is the possibility of a drop below .8120 - in which case .7945-.8020 would be potential support (50%-61.8% of .7698-.8344).
New Zealand Dollar / US Dollar
Yesterday's NZDUSD decline found support at the 38.2% of the rally from .6193. A drop below .6467 exposes Fibonacci and structural support in the .6380-.6420 zone. The specter of a EURUSD bullish triangle suggests that a drop to there will be corrective.
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 96.66 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, the USDCAD may stage a rally back to 1.1115 as short term momentum indicators are divergent with the latest lows. Structurally, the rally would be considered a B wave within the second A-B-C pattern since the top at 1.3068.
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 1.1026 and 1.0037 is a potential target (100% extension of 1.2303-1.0367).
British Pound / Japanese Yen
The GBPJPY has broken above a line drawn off of the June 12, June 30, and July 23 highs. However, RSI does not confirm the recent high which leaves the pair vulnerable. Structurally, the uptrend since the July low is intact above 153.84. Former resistance at 156.30 is potential support.
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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