Dollar Rally is Corrective

The EURUSD drop from 1.5909 is corrective in nature and should eventually be fully retraced. Potential support is at 1.5534 although today's low at 1.5611 may very well hold.

EUR/USD

We wrote last week that “the preferred count treats the advance from 1.5283 as a series of 1st and 2nd waves (1 and 2 of V). The rally from 1.5303 is wave (1) of 3. The next 'significant' move should be back to 1.57 (at least). As such, lighten up on longs at this point.” The correction reached 1.5612 yesterday and may be complete. The 61.8% of 1.5303-1.5909 at 1.5534 would be the next level of potential support. It is best to wait for this correction to play out before adding to / initiating long positions. The larger bullish bias is intact as long as price is above 1.5303.

STRATEGY: Bullish, against 1.5303 (but lighten up), target is above 1.6018

USD/JPY

We wrote last week that “it is possible that the USDJPY will accelerate lower in a 3rd of a 3rd wave so a bearish bias is warranted against 106.75.” The pair has failed to hold below 106.75, negating the short term bearish bias that we had held. It is still possible (but not probable) that a top is in place at 108.57.

GBP/USD

A C wave (of either a triangle or flat) is underway. If a triangle, wave C likely continues until 2.02 (March 27 top). If a flat, wave C will continue through 2.04. The drop from 2.0006 is viewed as corrective. As long as price holds above 1.9583 (and ideally 1.9648), upside potential remains significant.

STRATEGY: Bullish, against 1.9583, target 1 at 2.0175, target 2 TBD

USD/CHF

The USDCHF is probably on its way to a new low. The advance from .9647 is in 3 waves and therefore corrective. 3 wave movements are eventually completely retraced. A bearish bias is warranted against 1.0493. We wrote last week that a push through 1.0227 is likely. Look for resistance near 1.0266.” The USDCHF advance reached 1.0341 yesterday and the correction should be nearing completion.

USD/CAD

Bottom line is that we remain bullish as long as price is above 1.0047. With price above there, we maintain that a triangle is complete. Some doubt has entered out mind regarding this count simply because the USDCAD has not yet accelerated higher in a 3rd wave.

STRATEGY: Bullish, against .1.0047, target above 1.0324

AUD/USD

.9511 failed to hold but the AUDUSD decline from .9668 should be near completion. Look for support in the .9458/98 zone (50% to 61.8% of .9328-.9668). .9328 is the line in the sand for the larger bullish bias.

NZD/USD

An A-B-C correction may be complete at .7662 but our preferred count is for a rally to end closer to the 50% of .7921-.7445 at .7683 and perhaps even the 61.8%-78.6% at .7740-.7920. A rally to there would fill the 6/4 gap.

DailyFX

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