Unfortunately, overnight trading provided no clarification in terms of direction for the US dollar. The EURUSD remains in a tight range although a drop below 1.4000 would give scope to an eventual test and break of 1.3750. The GBPUSD pivot remains 1.6230 and the USDJPY pivot 93.50.
Euro / US Dollar
Very little has cleared up regarding the EURUSD. It is still possible that the rally from 1.3750 is unfolding as a diagonal. Staying above 1.4000 keeps this count valid. However, there are numerous bearish counts that would result in price dropping below 1.3750 (one shown above). Coming below 1.4000 would favor the downside.
British Pound / US Dollar
I wrote yesterday that “the rally from 1.6231 is in 3 waves but could be wave i of an ending diagonal in the wave v position. Staying above there keeps the trend pointed up and there potential support at 1.6430.” The key level remains 1.6231. Watch the EURUSD for directional clues here. A EURUSD drop below 1.4000 would be a warning that the GBPUSD is eventually headed below 1.5800.
Australian Dollar / US Dollar
The AUDUSD decline from .8269 is corrective in nature therefore odds favor a rally through that level prior to a top and reversal. The rally through .8124 favors bulls and the trend is bullish as long as price is above .7925. Coming below .7925 would expose .7786 and the risk of a breakdown.
New Zealand Dollar / US Dollar
My focus remains on the longer term structure, especially the rally from .4890, which is a textbook zigzag. Waves A and C are equal (and price reversed at the 50% retracement of the decline from .8219), which is common. As mentioned in recent days, “the uneasy sentiment remains here since the recent decline is more corrective than impulsive.” A close below the support line shown above would bolster the bearish cause.
US Dollar / Japanese Yen
The triangle continues to play out but there is an alternate bearish count in which the drop from 101.50 is a series of 1st and 2nd waves. 93.50 defines the trend (above is bullish and below is bearish). There is little else to say about the USDJPY at this point. One can not force analysis upon choppy, unclear market structure. Sometimes (this is that time), the correct decision is to do nothing and await clarity.
US Dollar / Canadian Dollar
Fibonacci support is not until the 1.1100-1.1200 zone in the USDCAD (50%-61.8% retracement of rally from 1.0782) but the decline from 1.1660 has met initial structural support from the base of the triangle of one less degree. Staying beneath 1.1660 favors bearish continuation towards mentioned Fibonacci support.
US Dollar / Swiss Franc
As mentioned in recent days, the rally from 1.0589 is a 3 wave correction that should be fully retraced. Confirming that the larger trend is still down is the 5 wave decline from 1.1026. I wrote yesterday that “a correction ended at 1.0893 and the objective is below 1.0367.” The extent of the rally from 1.07 warns of a spike through 1.0893 in what could be an expanded flat. A bullish count of the drop from 1.1026 would be a complex double three (w-x-y). 1.1026 defines the trend.
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.
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