Yesterday the EU finance minister meeting on Greece ended with no agreement and ever since then every forex news source has been super bearish on the EUR/USD. All you have to do is look at a chart to see EUR/USD is still one of the most bullish currency pairs. The bullish Elliott Wave count has become the highest probability wave count reaching for the 1.5400 – 1.5500 area. This does not mean we can’t break lower from here but the likelihood has dimmed despite all the news. I was stopped out on AUD/USD overnight but it allowed me to greatly increase my EUR/USD position which is climbing again as the US markets open and positive news is coming out of Europe. The new Greek finance minister (see SPECIAL REPORT: The Fate of Greece for more details) says that the Eurogroup made significant steps toward timely disbursement of the fifth installment of the initial Greek bailout. Juncker also said this morning that the EUR finance ministers have come to an agreement on European Stability Mechanism (ESM). The EFSF has also said guarantees will be raised from EUR 440B to EUR 780B in the future. This is good news and bad news because it means they are likely preparing for a Spanish bailout.
The AUD/USD took a nose dive overnight after the growth focus for China has been downgraded. Review the Australian Dollar fundamentals in the menu above for more information on that. I was stopped out on this trade and because it was a low probability long setup I switched all my margin used for AUD/USD over to EUR/USD. Since that time AUD/USD has risen off its lows substantially and looks like it will continue higher. The only way to continue the short term bullish outlook from an Elliott Wave perspective is to count the previous 3 rises as a leading diagonal. This being a lower probability pattern we may have another low below 1.0476 or we may just continue lower still.
The USD/CAD is pretty much the flip side of AUD/USD but appears more bearish than AUD/USD is bullish. I think bearish USD/CAD trade will continue to be a great trade until the true reversal of the US Dollar.
The USD/CHF continues to hammer down. It is surpassed its wave 1 high and is continuing lower. This is bad news for the US Dollar but there have been many times before that other currencies fell against the US Dollar while the Swiss Franc still appreciated. My focus for this pair remains 0.8200.