US Dollar Decline Underway Across Major Forex Pairs

Daily Forex Technicals | Written by DailyFX | Sep 12 08 13:48 GMT |

The US dollar has finally shown signs that it may post a near-term correction, as a previous forex market sentiment extreme clearly hinted at a USD pullback. We have accordingly shifted our technical forecasts across major forex pairs. EUR/USD After setting a fresh RSI extreme through recent trade and flirting with the 50 percent retracement of the 1.1600-1.6000 move, the EURUSD finally rallied off of its recent lows. A hammer formation on yesterday's candle suggests that this may be the start of a larger reversal—especially as recent EURUSD COT data shows that forex positioning reached an extreme through recent trade. Short-term targets to the topside now become previous spike-highs at 1.4180. USD/JPY According to our recent analysis, "Bigger picture, the advance from 95.72 is in 3 waves (corrective) and has retraced 50% of the decline from 124.13. As such, we are looking for the longer term downtrend to continue. This is our stance as long as price is below 110.65." Shorter-term, a hold of nearby trendline support and the pair's 200-day Simple Moving Average supports a near-term bounce. GBP/USD We continue to claim that the British Pound is headed for further recovery against the US dollar, as sentiment had clearly reached extremes on GBPUSD declines. Such dynamics are visible in our recent GBPUSD COT Analysis and increased financial media attention on GBP weakness. We wrote recently, "A rally through 1.7705 would signal that the short term trend is up." The next noteworthy resistance mark now becomes previous spike-highs at 1.7978. USD/CHF Our recent analysis on the US Dollar/Swiss Franc holds true: "The USDCHF advance from 96.47 is nearing potentially major resistance from a Fibonacci confluence and former congestion area. The 61.8% of 1.2566-.9647 is at 1.1453 and the 161.8% extension of the .9647-1.0624 rally is at 1.1590. The December 2007 high is at 1.1594. Like the GBPUSD, yesterday's inside day warns of a change in trend." USD/CAD "The high last week at 1.0775 was just pips away from an important Fibonacci confluence at 1.0791/98 (61.8% ext. of the .9055-1.0378 advance and 61.8% retrace of the decline from 1.1875 to .9055). If the A-B-C count above is correct, then the USDCAD is headed back to parity at minimum but possibly to a new low in the next year. AUD/USD We have been calling for counter-trend moves in the US dollar across the board, and the AUDUSD is no exception. A bearish AUDUSD extreme invites further topside corrections, and yesterday's impressive reversal suggests that a short-term low is in place at 0.7899. Next noteworthy resistance comes at the 38.2 percent retracement of 0.8814-0.7898 at 0.8246. NZD/USD As with other US Dollar pairs, it seems increasingly likely that the NZDUSD has set a short-term bottom at 0.6437. Next topside targets include yesterday's open price at 0.6632 and spike highs on 9/08 at 0.6846. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.