The US dollar is at a crossroads. There are bullish and bearish patterns that are both valid right now. Things should clear up in the next few days though.
The EURUSD (and the USD in general) is at a crossroads. As mentioned this morning, the advance from 1.3877 is in 3 waves to this point (corrective). The EURUSD dropped below a short term support line yesterday, which favors bears. A drop below 1.4302 would make the decline from near 1.49 impulsive and confirm that the larger trend is still down. The other possibility is that the drop from near 1.49 is wave X in a larger correction. Again, coming under 1.4302 would eliminate the bullish X wave count.
The USDJPY plunged and is nearing the important 103.52 level. A drop below there would warrant a bearish breakout strategy against 107.
The advance from 1.7443 is in 3 waves and either completes a corrective advance from 1.7443 or is the first leg of a larger correction. A drop below 1.7955 would make the decline from 1.8675 in 5 waves and indicate that the larger trend is still down. Failure to come under 1.7955 keeps the X wave count intact.
Expect weakness in the USDCHF and a break below 1.0686. Resistance should be strong at 1.0984 (61.8% of decline from 1.1092 and intraday reaction high.
The USDCAD bounce from 1.03 may be a small 4th wave within the impulsive drop from 1.0827. Tracing out this 4th and then a 5th wave would confirm my longer term bearish stance. Expect resistance near 1.05 (38.2% Fibo is at 1.0493 and former 4th wave is at 1.0519) if needed.
The advance from .6435 is in 3 waves so a the long term decline may be back underway. It is also possible that a larger correction is underway that will end closer to .72. Action over the next several days should help to clear things up.
Jamie Saettele writes Forex Technicals: The Day Ahead, Monday-Thursday (published 6-7 pm EST), Daily Technicals every weekday morning (9-10 am EST), COT analysis (published Monday mornings), and analysis of currency crosses throughout the week. He is also the author of Sentiment in the Forex Market.
Contact him at jsaettele@dailyfx.com
