The USD rally has accelerated but the currency is vulnerable to short term weakness. Under the most bearish EURUSD count, price will remain below 1.5630. Resistance is at 1.5550.
We were thrown off by the bounce ahead of 1.5500 on Friday. Expectations for a push through 1.5699 did not come to fruition. If the decline from 1.6039 is wave C of a flat that will end below 1.5283, then the EURUSD should continue to decline near term with 1.5630 remaining intact. Potential resistance is at 1.5549.
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The USDJPY remains choppy. To review, the rally from 95.72 is in 3 waves but so too is the decline from 108.57. This structure indicates that the USDJPY will continue higher to complete the correction from 95.72. Short term, weakness is possible in either wave c of a triangle (red letters) or in a small 2nd wave that serves to correct the advance from 103.76. Potential support is in the 106.00/50 zone as well as the 6/30 low at 104.99. Strategically, the best play is a playing bullish break through 108.57, against 106.06.
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Remember, a triangle is most likely unfolding. We wrote yesterday that “wave d should end this week and give way to the final leg of the triangle. We’ll look for a top and reversal late this week or next week in order to position for the expected drop below 1.93 that will complete the entire bear sequence from 2.1160.” Expect a strong rally in wave e to begin today or tomorrow.
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From 1.0010, 5 waves appear to be nearing completion. The bigger picture count calls for a rally to the 1.10 area (Fibonacci extension level at 1.0986 and former 4th wave congestion is near 1.10). Ideally, a corrective setback begins soon and brings price back near 1.03. At that point, a bullish bias would be warranted against 1.0010.
As expected, the USDCAD has broken higher from the triangle that has formed since January. This bullish break will complete a 3 wave corrective advance from .9055. Objectives are in the 1.05-1.08 zone. Expect the advance to continue.
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The NZDUSD has entered a long term decline. Our longer term objective is not until below .5927. However, there will be countertrend movements along the way. With 5 waves down from .7761 (as wave 1 of 3 of C), expectations are for a countertrend rally to begin soon. We’ll look to identify the end of that advance.
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