Euro Holding Above 1.2800
Japanese Yen Takes 117.00
British Pound Double Top
Swiss Franc Targets 1.2300
Canadian Dollar May Reverse
Australian Dollar Shoots Past .7600
New Zealand Dollar Nearing Important Resistance
EUR/USD The EURUSD rally has stalled at the 50% fibo of 1.2938-1.2723 at 1.2830 this morning. Hourly RSI is declining from near 70 and additional fibo resistance from the 61.5% at 1.2855 may limit upside potential. It is possible that the decline from 1.2938 to 1.2723 is the first of a 3 wave corrective pattern to correct the 1.2456-1.2938 rally. Thus, this rally from 1.2723 is the second wave and would be followed by a one more leg down before the resumption of the larger uptrend. Support is at the 8/15 low at 1.2693 as well as the 61.8% fibo of 1.2456-1.2939 at 1.2641.
USD/JPY The USDJPY has declined from the 8/25 high at 117.40 to just above 116.50 this morning. Additional weakness to a trendline from 113.95 is possible (near 116.25) but oversold conditions on the hourly may limit the downside. Also, the decline from 117.40 is in 3 waves. As such, the decline may be nearing its terminus. Still, a break below the aforementioned trendline targets the 38.2% fibo of 113.92-117.40 at 116.07.
GBP/USD Cable has soared above 1.9000, but made a double top in the process with the 8/16 high at 1.9023. Additional resistance is at the 78.6% fibo of 1.9144-1.8775 at 1.9065. The pattern has become a bit clearer over recent days. It looks like the rise from 1.8775 to 1.9027 (tonights high) is the second of a 3 wave correction. Thus, what should follow is the third wave. This decline could be violent and take the pair to where wave 3 (beginning at 1.9027) would equal wave 1 (1.9144-1.8775) at 1.8658. However, there is no evidence of a top at 1.9027 although bearish divergence with hourly oscillators favors the downside.
USD/CHF USDCHF continues to range primarily between the 1.2300 and 1.2400 figures most recently bouncing off of the 1.2300 figure this morning. A continued bounce targets todays high at 1.2373. Weakness below the 1.2300 figure exposes the 61.8% fibo at 1.2274. The bias right now is a neutral one as the pair is stuck in the mentioned range. However, hourly is rising from below 30 and may attract buying.
USD/CAD As we have expected, USDCAD continues to weaken. The pair appears to be tracing out the 3rd wave of a correction from 1.1456. Where might this correction end before buying returns? The 3rd corrective wave (beginning at 1.1319) would equal the first (1.1456-1.1170) at 1.1033. This is significant because the 78.6% fibo of 1.0927-1.1456 is at 1.1040 (just 7 pips away). This fits with the notion that initial moves at turning points are often retraced a large amount before a continuation. The initial move in this case is 1.0927-1.1456. USDCAD fell to 1.1049 last week and Fridays candle is a spinning top at the lower Bollinger band (daily). The evidence points to a rally from nearby levels. However, a break below 1.1040 exposes the 6/12 low at 1.0960.
AUD/USD As we have focused on in recent commentary, the longer term bias is a bearish one as evidenced by the break of the supporting trendline from.7270 (and COT positioning?see http://www.dailyfx.com/story/charting_center/futures_positioning_cot_report/Positioning_Indicates_That_AUD_USD_May_1156749929640.html ). The last two days rallies have propelled the Aussie to just above the 61.8% of .7670-.76549 at .7624. The 78.6% fibo is at .7644 and would be additional resistance. The bearish argument strengthens immensely on a break below last weeks low at .7549.
NZD/USD Kiwi has blown by resistance levels and trades just below the 8/16 high at .6439. Recently declining oscillators from extreme (or near extreme) levels favor a reversal to lower but a push above .6439 would destroy bears hopes. As is with the case with other pairs right now, overbought hourly conditions would seem to limit near term upside potential. Initial support is at the 8/28 high at .6389.
Al Bawaba
