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Pressure remains on the US dollar but the New Zealand Dollar is actually the weakest of the major currencies right today. A EURUSD resistance line is at 1.5000 today and bears watching if reached.
Euro / US Dollar
No change from yesterday – “the EURUSD has traded to a new high for 2009 and focus is now on the top of the channel from early July (5th wave channel, more on that below), which is at 1.5002 (on 10/14). Coming under 1.4670 would begin to suggest that a top is in place. The channeling nature of the EURUSD since July suggests that this labeling is correct. This means that the push above 1.4847 is likely wave of 5 of v of C.” Again, the channel top is 1.5002 today and increases about 11 pips per day.
British Pound / US Dollar
I wrote yesterday that “an objective remains 1.5300 (just above the 161.8% extension) but a corrective rally may delay a decline to that level. In any case, a bearish bias is warranted against the line extended from the September and October 8th highs.” The line has held thus far. An extension of weakness in a larger 3rd wave remains possible with price below 1.6125. Strategically, keep a small position on in the event of this occurrence. Potential short term supports are 1.5880, 1.5840, and 1.5825.
Australian Dollar / US Dollar
There is no change from yesterday – “The AUDUSD has reached the midline of its channel and traded to a new 2009 high today. Continued divergence with momentum suggests that the decline is in its latter stages. Levels to watch going forward are .9200, .9270, and .9325 (these are former support levels from 2008). Coming under .8979 would suggest reversal and shift focus to .8867.”
New Zealand Dollar / US Dollar
I advocated shorts against .7460 Monday in the .7370-.7420 zone. The NZDUSD has yet to stray far from that zone but has not made a new high either. The reversal potential remains but nothing is ever for certain so keep risk tight.
US Dollar / Japanese Yen
The decline from 101.50 is simply not an impulse. Either a triangle or complex correction is underway since December 2008. The next leg should be up towards 101.50 (maybe even above). The USDJPY has broken above 90.43, confirming a short term double bottom. Favor the upside against 88.00 and target 92.50 (measured level) as a minimum short term target.
US Dollar / Canadian Dollar
No change from yesterday – “1.0317, which is the 61.8% extension of 1.3068-1.0782/1.1730, has been reached. 1.0375/1.0400 is short term resistance and a rally above 1.0527 would begin to suggest that a bottom is forming. Additional objectives are .9914 and .9444.”
US Dollar / Swiss Franc
The USDCHF has dropped to a new low and is probably completing wave v of C (just as EURUSD is in the process of doing). 1.0037, the 100% extension of 1.2303-1.0367, is a potential reversal point.
Jamie Saettele publishes Daily Technicals every weekday morning, 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.
Contact Jamie at jsaettele@dailyfx.com if you would like to receive his reports via email.
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