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HARMONIC ELLIOTT WAVE

Tuesday, February 8, 2011

I’m seeing signs of Dollar losses today

To a certain extent things went my way yesterday but without the stronger follow-through higher for the Dollar. The marginal new low in EURUSD has deepened the bullish divergences there while the slightly stronger rally in GBPUSD has brought a certain degree of stability.

If I look at the Europeans I can see reasons for Dollar losses. If I look at AUDUSD I see the same. One of the question marks in my mind yesterday was the apparent strong bullish structure in AUDUSD, that is, one that would see significant gains over the next week or two. With the combination of the bullish divergences in EURUSD, the low in GBPUSD together with the strong AUDUSD and even EURJPY outlooks I feel that at the very least all of these should see gains today.

To be cautious we’ll see how these develop but I also see potential for yesterday’s low in EURUSD to be the end of the correction. That requires a mild shift of perception on USDCHF and possibly USDJPY. Certainly I can see potential in USDCHF particularly with the failure to break above 0.9622. However, it will imply a more restrained decline and this will be one of the key points to look for.

As for USDJPY… the situation is less clear. As I have always indicated the long term picture is bearish. What we are seeing now is part of a correction and there remains a question mark over how this correction develops. However, with the expected strength in EURJPY it wouldn’t surprise me to see USDJPY remain within a sideways consolidation briefly.

So, for today I do see more potential for Dollar losses. The first part of the day should see mild follow-through but be aware of the need for a correction before they can follow-through. I do feel that we’ll be seeing a lower Dollar by the end of the day.

Today’s free analysis is for AUDUSD and can be found on http://www.fx-forecaster.com/DailyForecast.html.

Good luck
Ian Copsey

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