Commentary: We wrote yesterday that “price is likely to continue lower towards the 100% of 1.3852-1.3608/1.3838 at 1.3595. The next bearish target is the 161.8% extension at 1.3445.” Given that the 100% extension has been breached and that the decline appears to be subdividing, we continue to favor the downside as long as price is below 1.3625. Look for a test of 1.3445 in the next few days.

Strategy: Remain Bearish, move risk to 1.3625 (from 1.3838), target 1 hit at 1.3600, next target at 1.3445

Japanese Yen Correction Playing Out
Commentary: There is no change to the USDJPY as the correction that we proposed was playing out has proved correct so far. “The USD/JPY decline from 119.83 is likely the first leg lower in the next bear wave. Look for a rally above 118.74 to challenge the 61.8% of 119.82-117.21 at 118.83 and possibly the 78.6% at 119.27 before a top and reversal. The larger bearish bias is strong below 119.83.” Wave c of the flat correction (from 117.68) would equal wave a (117.21-118.74) at 119.20.

Strategy: Flat, look to get bearish near 119.20, against 119.83, targets below 117.15

British Pound Tests 2.0000
Commentary: We wrote yesterday that “the bearish targets are 1.9989 and 1.9697. Look for the decline to accelerate in the next day.” Cable’s decline has accelerated as the pair tested the mentioned 1.9989 (100% extension of 2.0654-2.0181/2.0462) this morning. This is a critical point as a bottom and reversal is possible at this level (since the A-B-C correction may be complete). However, with no evidence of a bottom in the EURUSD and with Cable also appearing to be subdividing lower, continue to favor the downside and a test of 1.9700, as long as price is below 2.0132.

Strategy: Remain bearish, move risk to 2.0132 (from 2.0397), target 1 hit at 2.0000, next target at 1.9700

Swiss Franc Tests 78.6% Fibo
Commentary: We were looking for a top and reversal close to the 61.8% of 1.2165-1.1815 at 1.2032 but the USDCHF pushed through to test the 78.6% at 1.2090. We wrote yesterday of a thrust from a triangle, which is why we remain bearish (thrusts from triangles are usually terminal and eventually reverse). As mentioned last week, the larger bearish pattern is intact as long as price is below 1.2165.

Strategy: Remain Bearish against 1.2165, target 1.1400

Canadian Dollar Decline (USD/CAD Rally) Should Accelerate
Commentary: We maintain that the USD/CAD is in a rally leg that will push through 1.0699. The rally from 1.0484 and through 1.0564 instills confidence in the upside. We see it as highly likely that the rally from 1.0484 is the beginning of a third of a third wave. This is the position that often sees the market move the fastest. We expect the rally to accelerate in the next few days.

Strategy: Remain Bullish, against 1.0462, targets 1.0821 and 1.1043

Australian Dollar Drops Under .8400
Commentary: We wrote of two scenarios yesterday. The second one “has wave C of 4 still in progress and therefore price continuing lower towards the 100% extension of .8870-.8444/.8661 at .8235 before a low is extablished. A drop under .8398 strongly suggests that this is playing out”. The drop under .8398 occurred and we are looking for a drop to .8235. This remains our bias unless .8504 is taken out, at which time bullish potential comes to the forefront.

Strategy: Flat

New Zealand Dollar Potential Support at .7237
Commentary: We wrote yesterday that “a measured objective for the end of the decline is the 100% extension of .8108-.7553/.7701 at .7146. Chart support is at .7237 (5/24 low).” Continue to favor the downside and test of the mentioned levels. The near term bear case is strong as long as price is below .7488.

Strategy: Flat

Jamie Saettele is a Technical Currency Analyst for FXCM.