Euro May Make One More High
Japanese Yen Strong Across the Board
British Pound Quietly Weakens
Swiss Franc Trying 1.1900
Canadian Dollar Tight Range
Australian Dollar Slipping Below Trendline
New Zealand Dollar Breaking Diagonal Triangle
EURUSD The EURUSD has pierced the short term trendline from the 11/21 low at 1.2795. However, scope remains for one more test of 1.3367 to complete a small degree 5 wave sequence from 1.3131. Even a rally to that point is likely followed by a deeper decline so downside risk is high. Daily oscillators remain extreme as well with CCI above 100 and RSI above 70. The combination of this evidence also limits near term upside potential. A decline below the 12/4 low at 1.3281 suggests that a decline towards 1.3130 is underway.
USDJPY The recent consolidation has led to a decline into the mid 114s. This decline has the potential to reach the 8/4 low at 113.95 but a bounce is possible in the very short term. Favoring a bounce is bullish divergence on the 60 and 240 minute charts. Also, a possible reversal point is just below at the 50% fibo of 108.96-119.86 at 114.42. A resistance line on the hourly is near 115.00 and needs to contain any rally attempt for the short term bias to remain bearish. A break above 115.42 would suggest that a bottom is in place near current price (114.56). Daily RSI has dipped into oversold territory for the first time since April when the pair was on its way to 109. A cross back above 30 would be required to give a longer term reversal signal.
GBPUSD Cable appears to be nearing the end of a 5 wave bullish sequence from 1.7046. The 5th wave of this advance began on 10/11 at 1.8515 and is likely near the end of its 3rd wave. Thus, what is left is a corrective move lower and perhaps one more high above 1.9846 before a multi month decline begins to correct the advance from 1.7046. Fibo support begins at the 38.2% of 1.8834-1.9846 at 1.9461. Support at that area is reinforced by the 11/27 gap opening high at 1.9463.
USDCHF The USDCHF continues to probe the 1.1900 figure. While the potential remains for another dip below 1.1900 to complete the decline from 1.2769, bullish divergence with daily oscillators at the 1.1898 Friday low suggests that the next move of consequence is up. Daily RSI remains oversold at below 30 and a cross above 30 would signal a possible reversal to the upside. Initial resistance is at the 11/29 high at 1.2116. A decline below 1.1898 shifts focus to the 4/29/2005 low at 1.1837.
USDCAD The larger uptrend remains in place above the support line drawn off of the 9/1, 9/28 and 10/30 lows. However, the rally from 1.1303 has stalled and short term highs in price are accompanied by lower oscillator values (divergence). Still, only a decline below the mentioned supporting trendline suggests the potential for a significant downside move. That line is at 1.1270 today and increases 4 pips per day. The next bullish target would be the 11/21 high at 1.1493.
AUDUSD Fridays a bearish reverse hammer candle warns of a pending correction of the nearly vertical move higher. Daily RSI is also on the verge of crossing below 70 which would instill confidence in a move lower. From a pure price perspective, .7858 serves as a break out point for a move lower. Additional evidence of a topping scenario is that the Aussie is slipping below the trendline from the 11/27 low at .7642. .7921 needs to remain intact in order to continue to favor a declining scenario.
NZDUSD The daily Kiwi chart shows that RSI is declining through 70 today. We focused yesterday on the recent advance - mentioning that the advance from the 11/30 low at .6774 takes the shape of a diagonal triangle an inherently weak pattern that is often fully retraced. The Kiwi appears to have completed the diagonal triangle which shifts focus to the 11/30 low at .6774.
