Euro Will Likely Form a Low in Next Few Days

The EURUSD is consolidating above 1.58 but a drop below there is probable today or early next week before a tradeable low is in place. 1.5611 remains the bullish 'line in the sand'.

EUR/USD

There is little new to add regarding EURUSD structure. The weight of evidence continues to favor bulls. Our preferred count treats the consolidation from 1.6018 to the end of June as a triangle in the wave IV position (within the 5 wave advance from 1.1640). From the 6/23 low on 1.5468, the EURUSD has rallied impulsively, declined correctively, rallied impulsively, and is currently declining (correctively to this point). The drop from 1.6039 is viewed as wave ii of 3. Look for support near 1.57 today or early next week. We are bullish against 1.5611.

STRATEGY: Bullish, against 1.5611, targets 1.6325 and above

USD/JPY

The USDJPY decline from 107.75 could be the beginning of a 3rd wave within the decline from 108.57. Bigger picture, the advance from 95.72 is in 3 waves (A-B-C). Wave C is nearly 61.8% of wave A, a common relationship. The pair has broken the support line shown above and held below the 200 day SMA. We wrote yesterday to “look for resistance as high as 106.75/107.00; the former trendline and a congestion zone.” The USDJPY spiked into 107 yesterday and is pressuring the figure again this morning. If the bearish bias is to prove correct, then price needs to fall before 107.75.

STRATEGY: Bearish, against 107.75, targets 101.97 and below

GBP/USD

Wave C of a triangle may be complete at 2.0156 and wave D could be underway now. However, we favor the count that treats the advance from 1.9364 as wave C of a flat, which will not end until above 2.04. The red line on this chart is the 200 day SMA, which the GBPUSD is holding above. Keep risk at 1.9810 and look for support in the 1.9884-1.9925 zone.

STRATEGY: Bullish, against 1.9810, target TBD

USD/CHF

The short term picture remains clouded. When in doubt, focus on facts. The facts are that the rally from .9647 is in 3 waves and that since early May the USDCHF has made a series of lower highs. This evidence is bearish. As long as price is below the most recent high (1.0352), a bearish bias is warranted. 1.0250 may provide resistance.

USD/CAD

Wave E is still underway but is nearing an end. E waves (as we've written here often) are usually sharp and the decline has accelerated. In fact, do not be surprised to see a test of the lower triangle line near .99 before the USDCAD turns up. We'll look to identify the bottom next week.

AUD/USD

The AUDUSD setback has reached and bounced from just above the 50% of .9475-.9849. The drop from .9849 is clearly in 3 waves (corrective) to this point; therefore evidence continues to support bulls. A cautious bullish bias is warranted against .9677.

NZD/USD

The NZDUSD fell sharply yesterday but a drop below .7587 is required in order to make the decline from .7761 an impulse and suggest that the trend has turned back down. Until then, gains (albeit correctively) are still possible.

DailyFX

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