Currencies … update

We have been tracking currencies for a number of years. We tracked the worldwide volatility during 2008 – 2010. During 2010 we projected a declining USD, and rising foreign currencies into 2011/2012. Then when we started observing the blow off top in the CHFUSD we expected the foreign currency bull market to end, incrementally, with the Swiss Franc in 2011. All foreign currencies did top in 2011, the last being the JPYUSD. This put the USD in a multi-year bull market, lasting until 2017/2018. With all the foreign currencies now in confirmed bear markets. We are prepared to make some projections, versus the USD, for their bear market lows.

The first projection is the USD itself. With the USD in a bull market until 2017/2018 we expect the USD index, the DXY, to top out around 120. The advance should take the form of an ABC, like the one during 1995-2001. There is lots of overhead resistance between 88 and 92. This resistance zone is likely to end Cycle wave [A]. Then after a quick Cycle [B] correction, Cycle [C] should take the DXY to the targeted 120 area.

The EURUSD has been much weaker than other currencies having topped in price in 2008. The orthodox top, however, we have labeled in 2011 with an [SC] label. Historically, the Euro has been relatively weaker than it should be in a normal longer term cycle. We are expecting the EURUSD to bottom around the 2000 low of 0.82.

The JPYUSD has been on a dynamic decline since the BOJ initiated a massive quantitative easing program. This is nothing unusual for the Yen. It typically sells off rapidly after a significant peak, because it is usually the first currency to bottom. Our downside target, in the next year or so, is the 2002 low at 0.74.

The CHFUSD also had a dramatic selloff after the SNB pegged the CHF to the EUR in 2011. Currencies that have blow off tops such as this, and the Yen in 1995, reverse quite rapidly. Our target for this currency is also the 2000/2001 low around 0.55.

The CADUSD and the AUDUSD also made their [SC] tops in 2011, and we expect a decline down to their 2001 lows. For the CADUSD this should be 0.62, and for the AUDUSD 0.50.

Last, but not least, is the GBPUSD. The Pound has been markedly weaker than most foreign currencies. Having peaked in price in 2007, its actual [SC] high. It has held up fairly well considering it topped six years ago. However, we expect this leg of its bear market to carry it down to its 1985 low around 1.05.

To follow the currencies as we track their waves use the following link, pages 13 and 14: http://stockcharts.com/public/1269446/tenpp/13.