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HARMONIC ELLIOTT WAVE

Friday, July 17, 2009

The Dollar should lose against the Europeans today

I was pleased with some of the moves which hit very close to key support/resistance while a bit frustrated with others which saw deeper than average pullbacks. The clue I can take from these deeper pullbacks is that they normally occur in corrective structures and this tends to support my view that the Dollar weakness we are seeing is not part of a new downtrend but merely a correction within a correction.

Corrections can be complicated. Corrections within corrections can be a nightmare and that really forewarns us to be more careful with our trades. However, overall in the European currencies I feel the expectations I had have been largely fulfilled and I therefore suspect that by the end of the day the Dollar will have weakened further – targets around 1.4265 EURUSD, 1.0624-55 USDCHF and 1.6535-45 GBPUSD. All these areas are expected to hold and cause corrections.

Now USDJPY isn’t quite so straightforward. This was one with a deep pullback and opens the risk of further losses. Of all pairs I find this one the least clear and I sense it is a pair to leave well alone today. The JPY crosses to me look weak but only after a little more sideways consolidation. If my expectations for a higher EURUSD and GBPUSD are correct then it probably implies sideways to lower trading, but I’m not sure this will be aggressive if seen – more corrective in nature again.

Thus, if I have any preference it is to look harder at the European currencies which seem to have a more robust structure.

I feel AUDUSD may well see 0.7980-00 again but this too should progress to the 0.8080 target and potentially a little above to around 0.8105 but then pullback lower. USDCAD still seems to be in its larger correction and I’ll expect this higher by the end of day also…

Today’s free analysis is for GBPJPY and can be found on
http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (115 pips).

Have a great weekend.
Ian Copsey

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