Euro Bounce Uninspiring

EUR/USD – The EURUSD has inched higher from yesterday’s low at 1.2971.  The bearish side is favored in the medium term with as daily studies remain bearish and 5 waves from 1.1640 to 1.3367 are completed. 1.3050, reinforced by the 23.6% of 1.3296-1.2971 at 1.3047 and the 12/18 low, has proven difficult for bulls to penetrate.  The next resistance level is the 38.2% at 1.3094.  A break below 1.2971 argues for a continuation of the downtrend towards next support at the 11/20 low at 1.2804.     

USD/JPY – The USDJPY has pushed above Friday’s high of 119.04, making the rally from 118.10 to 119.21 roughly equal to the rally from 117.97 to 119.04 (111 vs. 107 pips).  The equality of the two waves and the fact that they each subdivide into 3 waves suggests that the pair has traced out a flat to correct the impulsive 119.67-117.97 decline.  Price needs to turn down from near current levels for the bearish structure to remain intact.  A break above 119.67 shifts focus to 120 and beyond.  A measured objective for a move down is where the decline from 119.21 would equal the decline from 119.67-117.97 – at 117.52.

GBP/USD – Cable has rallied to test former support at the 12/18 low at 1.9432.  This is also the 38.2% of 1.9749-1.9260 at 1.9445.  Similar to EURUSD, a break of the recent low (1.9260) suggests that another leg down is in the works.  A push through 1.9455 targets the next resistance level at the confluence of the 50% fibo of 1.9749-1.9260 / 10 day SMA at 1.9505/07.   

USD/CHF – The USDCHF is little changed today as the pair consolidates between 1.2331 and 1.2410.  The break above 1.2271 last week paints a bullish picture but be wary of a pullback.  240 minute RSI is divergent at the recent high (1.2393) and has declined from above 70.  The 1.2400 figure is likely well protected and the 200 day SMA is at 1.2384.  Near term support is at the 01/05 low at 1.2271 (which is also former resistance).       

USD/CAD – The USDCAD rally has stalled just above the 4/3 high of 1.1771.  With daily oscillators declining from overbought territory, bears may see some relief.  However, a resistance line from a potential bearish channel rests at 1.1878 today, just above the 50% of 1.2732-1.0927 at 1.1830.  That level is most certainly flooded with stops, which if taken out, the 11/15/2005 high at 1.1975 could be seen.  As mentioned though, overbought conditions may lead to a correction first, with the 12/29 high at 1.1667 as initial support.   

AUD/USD – The AUDUSD has stabilized at support from the 12/15 low at .7778 – yesterday’s low is .7780.  240 minute RSI has increased from below 30 (oversold), suggesting that the near term could see a bounce towards resistance which begins at the 01/05 high at .7850 (38.2% of .7979-.7780 is at .7856).  A daily close below .7778 would bolster the bearish case and give scope to the 50% fibo of .7413-.7979 at .7696.

NZD/USD – Kiwi ‘s rally stalled at the 38.2% of .7096-.6840 at .6938 this morning.  The quick sell-off from that level gives scope to a continuation of the move lower that began last week.  Resistance above .6938 is the 61.8% of .7096-.6840 at .6998 (10 day SMA at .6992).  A breakdown below .6840 shifts focus to the next bearish target – which is the 38.2% of .5927-.7096 at .6651.  Keep in mind that the big picture sports a 3 year head and shoulders pattern.

Jamie Saettele is a Technical Currency Analyst for FXCM.

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