US Dollar to Take Breather from Rampage

Action at the beginning of the week is suggestive of a larger US dollar decline from current levels.

EUR/USD

The EURUSD has advanced significantly from Friday's low. Even is a more permanent low is not in place, the EURUSD advance likely continues into the 1.4041-1.4232 area. This is the 50% to 61.8% Fibonacci retrace area of the decline from 1.4871. These levels intersect a potential resistance trendline on October 30 and November 11.

USD/JPY

The USDJPY decline from 108.07 is in 5 waves so a pullback is likely underway towards at least 101.65. 102.85 seems more likely given that this is the 50% and former congestion. We'll look to identify the completion of the corrective rally in the days ahead.

GBP/USD

It is possible that a major low is forming (or has formed) in the GBPUSD. The GBPUSD drop from 2.1160 has already retraced 50% of the entire advance from the 2001 low. This level (roughly 1.7) intersects with the 4th wave of one less degree as well, a common end point for corrections.

USD/CHF

One possible count for the USDCHF from the low earlier this year is a combination correction in the form of a double zigzag. If correct, then the USDCHF would be forming (or has formed) a significant top. Not shown on this chart is a trendline that has contained price since 2001. The USDCHF reversed at that line last week.

USD/CAD

The surge (and what a surge it was) above 1.20 was impressive. Weekly RSI has now entered overbought territory according to RSI. Last week's high was registered at the 50% of the decline from the 2002 high near 1.60. A pullback is likely from here.

AUD/USD

The AUDUSD has rallied from its low last week. The advance is probably the beginning of a larger correction that should reach .7166 (at minimum).

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 last week to continue for weeks, if not much longer.

DailyFX

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