In some ways it was a strange day yesterday. EUR/USD extended losses while GBP/USD launched another rally. Another important development was the 0.9937 high in USD/CHF – something I have been mentioning in the reports as a possible important target. Altogether, this is seeing a morphing of the current structures into the higher degree.
So does that mean a sudden rush into impulsive moves? Not really at this stage, I think. Particularly in the Europeans there will still be some caution as we go into the Brexit referendum that should present itself in corrective structures. Therefore, we’re not going to break free of the recent (and even long-term) consolidation. The time will come when a strong move is going to be seen… just don’t expect it too soon.
Thus, we’re more likely to retain the cautious trading style that has held us in its grips for far too long.
The Aussie has been pushing the downside, and while there is no absolute confirmation of follow-through on the downside, the state of momentum does suggest the potential for losses to resume. There will come a time when we’ll see a deeper push higher – but I tend to feel that won’t happen today…
The JPY pairs were relatively tame yesterday, particularly in EUR/JPY. The fact that USD/JPY reversed to the upside was a bit of a pain, but I’m not really too much in favor of robust gains at this point. Equally, the cross still has downside potential – but could reverse higher at any point. I tend to feel that we’ll continue to see limited movement in both JPY pairs – but I am expecting a sharper move before too long…
Today should likely be yet another cautious day…