US Dollar Pullback (Decline) May Accelerate

The EURUSD is holding above a short term support line. Staying above there keeps the recovery scenario firmly on track. "The decline from 1.4871 is an impulse (5 waves). Expectations were that the ensuing advance would prove corrective and it has.

EUR/USD

The EURUSD is holding above a short term support line. Staying above there keeps the recovery scenario firmly on track. "The decline from 1.4871 is an impulse (5 waves). Expectations were that the ensuing advance would prove corrective and it has. However, the advance is extremely shallow when compared with the preceding decline, having not even reached the 38.2% (which would be near 1.39)." .

USD/JPY

The USDJPY has reached the 38.2% of the most recent 5 wave drop. Not shown is the break above a short term trendline. This development suggests that a larger correction, perhaps to the 61.8% (103.44) is underway.

GBP/USD

A flat could be unfolding in which the B wave low is this dip below 1.73. The other possibility (shown on the chart) is that the GBPUSD is about to accelerate lower in a 3rd wave (possible as long as price is below 1.7662). Given the extent of the decline to this point, the former seems more likely.

USD/CHF

"The USDCHF exceeded 1.1422. The advance is in 5 waves (as is the EURUSD decline from 1.4871) so a 3 wave correction is expected. Initial support is at 1.1215." The USDCHF has declined in 3 waves and reached the former 4th wave, which is always the first potential support area. Subjectively, I favor the idea that the drop is the first leg of a larger correction.

USD/CAD

Looking out longer term, the USDCAD is approaching a potentially strong resistance area near 1.14. This is the 100% extension of the .9055-1.0383 advance.

AUD/USD

I wrote yesterday that "the second AUDUSD target (.6467) was reached. This is the 100% extension of .9856-.7799/.8524. With the objective being met and with daily RSI deeply oversold and divergent with price, expect a pullback/consolidation." The AUDUSD has pulled pack over 500 pips. On the intraday charts, the advance looks like the beginning of an impulse, so continue to favor strength.

NZD/USD

The minimum objective of below .5927 has been reached. The outlook is the same for the NZDUSD as for the AUDUSD; expect the recovery that began yesterday to resume for at least a few more days, if not a few weeks.

DailyFX

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