It is possible that the US dollar has turned from a significant bottom. Although the EURUSD and USDCHF have failed to test their December 2008 price extremes, all other dollar majors (including the US dollar index) have done so. This sets up a non confirmation / divergence that tends to occur at significant turning points. In fact, a similar warning signal was evident at the last major USD bottom in July 2008 when the EURUSD made a new high and the US dollar index failed to make a new low.


Classical Outlook: Some whipsaw price action of late with the market initially rallying to fresh 2009 highs by 1.4445 ahead of the latest sharp pullback. This sets up a very bearish looking weekly candle that likely signals an end to the recent rally off the 1.3750 lows and opens a more significant drop back towards 1.3900-1.4000 over the coming week. Rallies are now expected to be well capped ahead of 1.4300.
Elliott Wave Outlook: It is possible that the entire rally from the October 2008 low is complete. Wave C from 1.2454 is in 5 waves and would be a truncation. Only the EURUSD and USDCHF failed to test the December 2009 price extremes. The USD Index slightly exceeded its December 2009 low and reversed. This signals a divergence the likes of which we saw at the July 2008 USD bottom. Dropping under 1.4000 confirms the top. I'll have a special USD report early next week.



Classical Outlook: A bearish gravestone formation on the weekly chart should not be encouraging for bulls with the set-up implying that we have reached some form of a top and are on the verge of a major pullback. Look for an established yearly high by 1.7040 ahead of a deeper drop back towards 1.6300 over the coming days.
Elliott Wave Outlook: I wrote last week that a triangle is complete in the GBPUSD. Price should stay above 1.6470 on its way to at least 1.7000. Keep in mind that the rally will complete the entire advance from the January low as thrusts from triangles are considered terminal. The rally from 1.6337 may complete the terminal thrust from the triangle. Coming under there would confirm a top.



Classical Outlook: Although the broader price action remains bullish, we are beginning to see signs of potential exhaustion with the market rallying to fresh yearly highs by 0.8470 ahead of the latest sharp reversal back into the mid-0.8300's by previous weekly opening levels. This sets up a bearish shooting star top formation that suggests a potential shift in the structure. Initial support comes in by 0.8200-65 with a break exposing 0.8125 further down.
Elliott Wave Outlook: Bigger picture, the AUDUSD is at risk of a significant decline as the structure of the rally from .6005 is corrective (3 waves). I have been waiting for wave v of C (from .7698) to complete. There are signs, such as momentum considerations (divergence) and the USD Index reversal, that the rally is complete as a diagonal. Coming under .8120 would confirm the top.



Classical Outlook: Overall price action still remains quite constructive with the market putting in yet another weekly higher high and higher low, ascending to fresh 2009 highs by 0.6815 ahead of the latest minor pullbacks. However, we would recommend that bulls consider taking some profits with the price stalling by the 100-Week SMA and subject to a more significant reversal in light of broader market price action in favor of the USD.
Elliott Wave Outlook: The NZDUSD is in a similar position. A diagonal in wave 5 (from .6150) may be complete. Today's bearish candle along with RSI divergence warns of a top. Coming under .6467 would confirm the top.



Classical Outlook: Intense rally on Friday threatens the broader bearish structure with the market racing above the daily Ichimoku cloud top and 78.6% fib retrace off of the 98.85-91.75 move, before finally stalling out by the more significant 61.8% fib retrace off of the 2009 high-lows. Nevertheless, we retain a bearish bias with a medium-term lower top sought out below 98.85 ahead of the next major drop below 91.75 towards 87.15.
Elliott Wave Outlook: The burst through 97.00 confirms that the USDJPY remains in a multi month correction that will probably end above 101.50. In this instance, the choppy decline from there is labeled as a combination X wave. Short term support is 96.10/86.



Classical Outlook: Despite the latest pullback, we still hold a constructive outlook for the pair and look for a low to carve out by 1.0630 ahead of renewed strength back above 1.1725 over the coming weeks. Medium-term studies show the market very well supported below 1.1000 and while it is too early to call for a major double bottom, a hammer close on the weekly chart strengthens bull case.
Elliott Wave Outlook: The USDCAD is in a situation similar to the GBPUSD, AUDUSD, and NZDUSD. The recent price extreme at 1.0631 is accompanied by RSI divergence on the daily. Favor strength to at least 1.0940 near term but an impulsive rally from the low would be evidence of an outright reversal.



Classical Outlook: The market has mounted a slow and steady recovery since posting historic lows below parity in 2008. But for the recovery structure to remain intact, the market needs to hold above the December 2008 1.0410 lows. A 2009 low was recently made by 1.0560 and we look for the latest consolidation to hold above this level ahead of a fresh upside break beyond 1.1025 which offers itself as medium-term resistance. Below 1.0560 concerns.
Elliott Wave Outlook: In the same position as the EURUSD (but as the inverse), the USDCHF has failed to test its December 2008 low. However, all other dollar pairs (except the EURUSD) have - which sets up a divergence that is often seen as significant turning points. Exceeding 1.1026 would confirm a bottom.



Classical Outlook: No clear bias here as the market continues to chop around. A break back above 140.00 or below 127.00 is now required for clearer directional bias. Above 140.00 suggests major base in place, while back below 127.00 opens the door for bearish continuation.
Elliott Wave Outlook: The EURJPY is testing the top of its multi month range and momentum favors a break higher. The thrust higher may be from a triangle (which would serve as a B wave). Staying above 132.76 keeps the uptrend intact.



Classical Outlook: Very bullish price action with the market rallying to fres 2009 highs beyond 162.60 to keep broader recovery structure intact and confirm fresh higher low by 146.75. Look for additional gains over the coming days towardsnext key resistance in the 170.00 area. Back under 158.00 now required to negate.
Elliott Wave Outlook: Having already broken above the top of its range, the GBPJPY has sights set on 165.00 (former resistance).



Classical Outlook: Weekly studies still show plenty of room to run and we look for additional setbacks towards the 0.8200 area. As per our commentary in the previous week, a lower top appears to be carving out by 0.8700 to be confirmed on a drop below the 2009 lows at 0.8400 over the coming days. Rallies should now be well capped ahead of 0.8600.
Elliott Wave Outlook: The structure of the decline since the top just shy of parity is not especially clear, which is the first sign that the pair in question is stuck in some sort of correction. However, the rally off of the low is choppy as well which leaves the EURGBP vulnerable to a drop below .8400. Price is in the middle of a multi-week range right now so near term direction is unclear. Above .87 exposes .8870 and below .84 exposes .8230.



*Entry prices for trades that are recommended 'at market' are listed as the price at the time of publication