EUR/USD – It has been our working assumption that the decline from 1.3296 is impulsive and the fact that we can count 5 waves from 1.1640 to 1.3367 favors a major turn lower. We have also maintained that 1.3051 was key to the bearish case. A daily close above there would do damage to the bearish structure that seems to be unfolding. Yesterday’s high was held to 1.3043 so bearish implications remain. A break below 1.2865 targets the next bearish target at 1.2784 (which is the 161.8% extension of 1.3367-1.3051 / 1.3296). For perspective, we have decided to show the monthly chart this morning. The long term wave structure places the EURUSD in a wave C – which could very well see price decline below 1.1640 before all is said and done (this is of course over the course of the next year or so). This may sound crazy, but so did 1.3600 in 2000. Again, 1.3051 is key for the near term.

USD/JPY – We still maintain our position regarding the longer term implications from the 13 month inverse head and shoulders pattern. A measured objective is at 128.67 – which is where the advance from 108.96 would equal the advance from 101.67 to 121.38. The pair continues to make higher highs. A measured objective lies at 123.21, which is where the 114.42-119.67 rally would equal the rally from 117.97. The USDJPY dipped below 121 this morning, but weakness was short lived and the pair remains virtually unchanged since yesterday near 121.50. The congestion area that held this morning, 120.05/87 remains initial support. A trendline drawn off of 114.42 and 117.97 reinforces support at the 120.00 figure.

GBP/USD – Our analysis in the last week has stated that “price is expected to exceed 1.9846 before a major correction takes place.” That major correction lower may have just started. 5 waves up from 1.7046 and 5 waves up in the larger 5th wave position from 1.8090 suggest that a major turn lower is upon us. The psychological 2.0000 figure bears watching on a break above 1.9915. However, bearish divergence with every oscillator on the planet (on the daily) at 1.9915 favors a ‘topping out’ scenario. While only a decline below 1.9260 grants confidence to a longer term bearish outlook, a dip below this morning’s 1.9691 would make the decline from 1.9915 5 short term waves down and warrant more aggressive bearish action.

USD/CHF – The USDCHF decline to 1.2380 this morning may have been the bottom of a corrective wave 4. A break above 1.2546 would confirm the corrective nature of this morning decline and continue the trend of higher highs. The next bullish target is the 1.618 extension of 1.2271 – 1.1878 / 1.2110 at 1.2746. As long as 1.2271 holds, the bias remains bullish.

USD/CAD – The USDCAD is very close to our measured objectives. The 50% of 1.2731-1.0927 is at 1.1830 and the pair rallied abovce there this morning. The 1.618% extension of 1.0927-1.1456 / 1.1028 is at 1.1883. This area – 1.1830 to 1.1883 is an ideal topping area for the USDCAD before the pair resumes its longer term downtrend to below 1.0927. The potential 2+ year bearish channel reinforces resistance at the current juncture. The topping scenario is best served by one more rally to above 1.1850 in order to complete 5 small waves from 1.1644. A decline below 1.1644 suggests that the decline has already started.

AUD/USD – It looks like our assumption that Aussie was in the process of breaking a 3 year resistance line was wrong as the pair has plummeted 100 pips today (the ATR is 61). What we are left with is a rather well-defined potential head and shoulders top. A decline below .7759 would complete the pattern and expose the 11/13 low at .7614. .7936 is key to the bearish structure.

NZD/USD – The 7 month trendline is the pivot in Kiwi. That line is at .6886 today and increases 7 pips per day. Looking at the internal wave structure, we are more likely to favor the downside given the 5 wave decline from .7096 to .6840 which was followed by an overlapping (therefore corrective) advance to .7034. It takes a break below .6840 to confirm our position but this morning’s decline does warrant a cautious bearish stance against .7034.

Jamie Saettele is a Technical Currency Analyst for FXCM.