Euro Breaks Through 1.56, Expect 1.58 Next Week

Expect a oush through 1.58 next week. We touch on the EURUSD bullish potential in the techs today as well near term USDJPY possibilities.

EUR/USD

Now that the EURUSD has broken through 1.5586 and confirmed our bullish bias, we can focus on bullish potential. The advance from 1.5283 is probably either the beginning of a 5 wave bull cycle or a B wave of a flat or triangle. In all cases, the EURUSD is expected to exceed 1.5843. Near term resistance is at 1.5650 (6/10 high). We’ll look to add to longs next week. Risk can be moved to 1.5464.

STRATEGY: Bullish, against 1.5464, target above 1.5843

USD/JPY

Near term, expect this decline to test the 6/11 low of 106.56. A deeper decline is possible; which would likely serve as wave B (or X) within the correction from 95.72. The advance has formed a channel and the upper end of the channel is not until the 111/112 area. Also, the wave from 102.58 would equal the 95.72-105.70 advance at 112.62. The upper channel line intersects 112.62 in the middle of July.

GBP/USD

We still expect a push through 1.9850 by July but near term, the probability of a corrective decline is high as suggested by the 5 waves up from 1.9469. As such, it is wise to lighten up on longs. We’ll look for support next week beginning at 1.97.

STRATEGY: Bullish, against 1.9469, target above 1.9850 (BUT lighten up on longs as the probability of a correction is high)

USD/CHF

"There is little doubt that the advance from .9647 is corrective because a triangle separates the two legs. The only question is whether or not the rally from .9647 is a complete 3 wave rally or just the first wave of a larger more complex correction." The down-up-down-up sequence since the 1.0624 top is most likely a series of 1st and 2nd waves. A bearish bias is warranted against 1.0473. Still, the USDCHF pattern is not nearly as clear as the EURUSD pattern, so confidence in this pair is low right now.

USD/CAD

A triangle is unfolding. Expect wave E of the triangle (underway now) to be sharp and end below 1.00. This decline will present a high reward/risk opportunity against .9818. A breakout in larger wave C towards 1.05/08 is expected to follow completion of the triangle.

STRATEGY: Bullish, against .9818, target above 1.0324 (but should be in a small position now since the triangle is unfolding, add to longs below 1.00)

AUD/USD

The AUDUSD advance has accelerated and price has pushed through .9486 (former support), confirming that the decline from .9653 was corrective and that the AUDUSD is headed to a new high as we have long suspected. "The rally from .8952 is wave C of a large 5th wave diagonal that could extend to a measured objective just below 1.00 in coming weeks (.9936)." Risk can be moved to .9402

STRATEGY: Bullish, against .9402, target TBD

NZD/USD

Given the counts in the other USD pairs, we do not think that the NZDUSD advance from .7445 is complete but a sizeable correction is probably underway. The rally from .7445 consists of 2 nearly equal waves (a-b-c) and could be wave A of a flat. Bigger picture, the NZDUSD is expected to advance 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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