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). The nature of the choppy trading that has persisted from the 1/12 low at 1.2865 is corrective and could be a fourth wave in a 5 wave bearish sequence from 1.3367. A drop below 1.2865 more strongly argues for the bearish case going forward.

USD/JPY – We still maintain our position regarding the longer term implications from the 13 month inverse head and shoulders pattern. A long term measured objective is at 128.67 – which is where the advance from 108.96 would equal the advance from 101.67 to 121.38. Weakness from 121.78 looks like the 4th wave in a 5 wave bullish sequence that began at 114.42. This morning’s low held at the 38.2% of 117.97-121.78, which is reinforced by the 1/15 low at 120.05. 119.67 is key to the short term bullish case. A shorter term measured objective lies at 123.21, which is where the 114.42-119.67 rally would equal the rally from 117.97. This is the target on a break above 121.78

GBP/USD – 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 – and may have already started. The psychological 2.0000 figure bears watching on a break above 1.9915. However, bearish divergence with oscillators (on the daily) at 1.9915 favors a ‘topping out’ scenario. Near term, the impulsive decline from 1.9915 to 1.9644 is in 5 waves and this morning’s rally may be a corrective 2nd wave. 2nd waves often retrace 61.8% to 78.6% of the 1st wave. In this instance, the 61.8% is at 1.9812 and the 78.6% at 1.9857. A rally to there could then give way to a 3rd wave down, which would likely be powerful.

USD/CHF – No change in the USDCHF: The USDCHF decline to 1.2375 on 1/23 may have been the bottom of a corrective wave 4. A break above 1.2546 would confirm the corrective nature of the 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 – Our working assumption is the potential head and shoulders top that began forming in early December. A decline below .7759 would complete the pattern and expose the 11/13 low at .7614. .7936, which is the top of the right shoulder, is key to the bearish structure. Daily studies are bearish now as well. MACD slope is negative, RSI and CCI are below midpoints and price is below the 20 day SMA.

NZD/USD – The 7 month trendline is the pivot in Kiwi. That line is at .6893 today and increases 7 pips per day. The pair is testing yesterday’s high right now at .7034. We have focused on two scenarios over the past week. The first is that the rally from .6840 had traced out an a-b-c correction at .7034, which should then give way to weakness. The other possibility was that the rally from .6840 was a combination of 1st and 2nd waves. As long as .7096 holds as resistance, the former interpretation remains valid. The 78.6% of .7096-.6840 is at .7041.

Jamie Saettele is a Technical Currency Analyst for FXCM.