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Action at the beginning of the week is suggestive of a larger US dollar decline from current levels.

The EURUSD has advanced significantly from Friday’s low.  Even is a more permanent low is not in place, the EURUSD advance likely continues into the 1.4041-1.4232 area.  This is the 50% to 61.8% Fibonacci retrace area of the decline from 1.4871.  These levels intersect a potential resistance trendline on October 30 and November 11.

The USDJPY decline from 108.07 is in 5 waves so a pullback is likely underway towards at least 101.65.  102.85 seems more likely given that this is the 50% and former congestion.  We’ll look to identify the completion of the corrective rally in the days ahead.

It is possible that a major low is forming (or has formed) in the GBPUSD.  The GBPUSD drop from 2.1160 has already retraced 50% of the entire advance from the 2001 low.  This level (roughly 1.7) intersects with the 4th wave of one less degree as well, a common end point for corrections.  

One possible count for the USDCHF from the low earlier this year is a combination correction in the form of a double zigzag.  If correct, then the USDCHF would be forming (or has formed) a significant top.  Not shown on this chart is a trendline that has contained price since 2001.  The USDCHF reversed at that line last week.

The surge (and what a surge it was) above 1.20 was impressive.  Weekly RSI has now entered overbought territory according to RSI.  Last week’s high was registered at the 50% of the decline from the 2002 high near 1.60.  A pullback is likely from here.

The AUDUSD has rallied from its low last week.  The advance is probably the beginning of a larger correction that should reach .7166 (at minimum).

The minimum objective of below .5927 has been reached.  The outlook is the same for the NZDUSD as for the AUDUSD; expect the recovery that began last week to continue for weeks, if not much longer.

Jamie Saettele writes Forex Technicals: The Day Ahead, Monday-Thursday (published at 6 pm EST), Daily Technicals every weekday morning (9 am EST), COT analysis (published Monday mornings), and analysis of currency crosses throughout the week.  He is also the author of Sentiment in the Forex Market.