· Euro Could Break 1.2529<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
· Japanese Yen Holding Above 116.00
· British Pound Still Not Wanted
· Swiss Franc Also to 1.2500
· Canadian Dollar Prepares To Test Resistance
· Australian Dollar Breaking Down
· <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />New Zealand Dollar Heading To Previous Low
EUR/USD The EUR/USD decline from 1.2677 looks far more impulsive than any rally we have seen in recent days. The pair found support just above the 6/20 low at 1.2540 making a low yesterday at 1.2550. The subsequent rally from 1.2550 to 1.2592 looks like the first of a 3 wave corrective pattern with the decline to 1.2559 as the second wave. Thus, the rally from 1.2559 would be a third wave that could test the 38.2% fibo of 1.2677-1.2550 at 1.2598, 50% fibo at 1.2613 or 61.8% fibo at 1.2629. The larger trend appears down though unless 1.2677 can be overcome (6/22 high). If support at the 1.2529 low gives way, then a test of the 61.8% fibo of 1.2065-1.2970 at 1.2412 is in play.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
USD/JPY The impressive dollar rally broke USD/JPY above 116.00 for the first time since 4/24. The pair now looks headed to test the 78.6% fibo of 118.87-108.96 at 116.73. The pair also trades right at the 200 day SMA (115.99). Consolidation of the recent rally to 116.27 could persist until retracements of 114.63-116.27 at 115.65 (38.2%), 115.45 (50%), or 115.26 (61.8%). Bolstering the bullish outlook is the 20 day SMA crossing above the 50 day SMA two days ago.
GBP/USD Cable is very weak as the pair broke below the 6/13 low at 1.8315 and appears headed towards the 50% fibo of 1.7227-1.9024 at 1.8124. The 10 day SMA has broken below the 50 day SMA as well. The 10 day had been above the 50 day since 4/12. Still, short term double bottom along with positive divergence with oscillators on the hourly gives scope to a contra move. Resistance comes in at the 38.2% fibo of 1.8468-1.8254 at 1.8335.
USD/CHF USD/CHF has traded to the top of a recent range and trades right at the 5/2 high of 1.2447. A break above this level exposes the 1/24 low at 1.2553. Like the other pairs though, a retrace of recent dollar strength is suggested by the divergence with oscillators and price on the hourly. Support stems from the 38.2% fibo of 1.2316-1.2447 at 1.2397. Fibonacci extensions of 1.1919-1.2299 place targets for a potential top at 1.2541 (138.2%) and 1.2629 (161.8%). Indicative of recent strength is the positive 10, 50 day SMA cross.
USD/CAD Without much selling USD/CAD after the rejection yesterday at 1.1199, the pair looks poised to again challenge the 1.1250 area. In fact, the rise from 1.1178 looks like a 5th wave and fibo extensions of wave 1 (1.1036-1.1092) would suggest an end of wave 5 at 1.1246 (138.2%) and 1.1259 (161.8%). This is in the area of the wall of resistance that we have focused on. Immediate support in the event of weakness is at yesterdays high of 1.1199 and todays low of 1.1166.
AUD/USD AUD/USD is also weaker this morning and the pair has pierced yesterdays low at .7322. If the pair can break below the 61.8% fibo of .7014-.7791 at .7311, then price probes the 4/13 low at .7237. As we have mentioned for the past few weeks, price has been capped by the 10 day SMA, which currently sits at .7380.
NZD/USD Kiwi has plummeted, breaking below the 6/19 low at .6149 and yesterdays low at .6076. The next area of support would be the 4/4 low at .6012 and the 3/29 low at .5991. The 10 day SMA has held as resistance the past week and currently is at .6182. Positive divergence with oscillators on the hourly gives scope to a contra move. Resistance comes in at the mentioned low from yesterday at .6076. The dollar rally has looked impulsive when compared to the anti-dollar move favoring a bullish dollar bias (bearish NZD/USD bias).
Glossary of Terms
CCI(20) 20 day Commodity Channel Index
> 0 bullish
0 > bearish
> 100 extremely bullish
-100 > - extremely bearish
RSI(14) 14 day Relative Strength Index
> 50 bullish
50 > bearish
> 70 overbought
30 > - oversold
MACD ? - MACD slope (MACD MACD[1])
> 0 bullish
0 > - bearish
Mom(8) 8 day Momentum (shorter-term direction)
> 0 bullish
0 > - bearish
ATR(14) 14 day <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />AverageTrueRange (volatility)
Medium 75th percentile* > ATR(14) > 25th percentile*
High - > 75th percentile*
Low 25th percentile* >
ADX(14) 14 day Average Directional Index (directional strength)
> 30 strong
30 > - weak
*measured against past 3 months
