The US Dollar looks likely to challenge key resistance levels against the Euro, British Pound, Canadian Dollar, and Australian Dollar through upcoming currency trade. Yesterday's false break lower against the Euro and British Pound proved short-lived, and we maintain our bearish bias on the EUR/USD and GBP/USD.
Despite a false break through yesterday’s trade, the Euro remains in a tight wedge formation against the US Dollar. The falling trendline dating back to early October has thus far held, and the Euro/US dollar pair subsequently sees support at recent monthly lows of 1.2400. Given overall bearish momentum, it seems increasingly likely that the Euro will go on to challenge said support through upcoming trade, and a failure eyes April, 2006 lows of 1.2065. Our short-term bearish bias remains intact absent a Euro/US Dollar breach above resistance at 1.2835.
The US Dollar/Japanese Yen has seemingly broken its wedge formation, and a dip below support at approximately 95.70 suggests that further short-term losses are likely. Next price floors come in at the important 61.8 percent Fibonacci retracement of the 90.90-100.50 move at 94.60, which likewise coincides with an intraday double-bottom from November 12. Previous trendline support has now become resistance, and the USD/JPY has shown difficulty climbing above 96.00. Our very short-term bearish bias remains intact as long as price remains below the pair’s falling trendline at approximately 97.00.
The British Pound/US Dollar pair remains in much the same situation as the Euro/US Dollar, as a false break above its recent trend channel leaves the GBP/USD confined within its month-long downtrend. Trendline resistance remains near the psychologically significant 1.5000 mark, while the pair currently trades near Fibonacci support levels at the 61.8 percent retracement of the 1.4555-1.5250 move at 1.4825. A break below said mark would likely precipitate a move towards subsequent spike-lows of 1.4639.
The US Dollar/Swiss Franc has shown little willingness to slow its ascent, and the pair now trades near 15-month highs at the 1.2213 mark. Said level marks the next plausible price ceiling, and a break higher would target subsequent spike-highs of 1.2314 and 21-month highs of 1.2464. Yet the USD/CHF remains in clearly overbought territory, and every point move higher leaves it at increased risk of a short-term retracement. The psychologically significant 1.2000 mark serves as the nearest price floor on any short-term USD/CHF declines.
The US Dollar/Canadian Dollar uptrend remains intact, and the pair recently cleared important resistance of the 61.8 percent Fibonacci retracement of 1.3015-1.1460 at 1.2420. Said USD/CAD resistance was the major stumbling block in the way of further rallies, and it now seems increasingly likely that the pair will go on to challenge recent multi-year highs of 1.3015. Former resistance now serves as immediate support at the aforementioned 1.2420 mark.
The Australian Dollar/US Dollar currency pair has broken out of its recent wedge formation, and the AUD/USD now eyes a challenge of recent lows near the 0.6000 mark. The break below the AUD/USD wedge formation likewise coincided with a break of the 61.8 percent Fibonacci retracement of the 0.6000-0.7010 move at 0.6390—confirming that a further move towards 0.6000 is likely. Previous support of 0.6390 is now resistance, and there remains little in the way of firm AUD/USD price floors until the aforementioned 0.6000 handle.
Further consolidation in the New Zealand Dollar/US Dollar pair leaves little directional bias for upcoming trade, as the pair trades almost exactly at the middle of its recent price channel. Overall momentum favors further NZD/USD declines, but the lack of conviction in recent price action suggests that the pair may continue to consolidate until further notice. Noteworthy support for the NZD/USD comes in at previous lows of 0.5348, and a recent test below said mark resulted in a reversal at April, 2003 lows of 0.5319. Resistance comes in at weekly highs of 0.5754.