It has been almost four months that EUR/USD has remained in a daily range. GBP/USD has also — although with a mild bullish bias. These extended consolidations are killers in terms of profits, but really effective for losses. This range seems likely to continue until the end of this month at least — maybe a little more. Following this period into early September there should be a stronger risk of a trend developing. For now, take each stage step by step. The structural development in the lower degrees can be described like spider footprints — all over the place — and this has sure made life difficult.
I have had to make adjustments to USD/CHF and the dip below 123.78 in USD/JPY has tended to provide a more dollar bearish outlook. It’ll probably still remain messy and I do see options that could retain some pairs in consolidation. However, keep the primary dollar weakness in the back of your mind for now. This is reflected in GBP/USD and probably in a more defined outlook. Having said that, to be the contrarian, AUD/USD has been seeing losses and these do not look complete just yet.
Therefore, there’s quite a mishmash of directional plays on the go right now.
The JPY pairs — as mentioned above — USD/JPY has slipped below 123.78 and does suggest further slippage, but there is an alternative option that could surprise. Right now it’s in a position where it could go in either direction — basically corrective on either side. This could allow EUR/JPY to rally, but will need the combined effort in both EUR/USD and USD/JPY to make this work. Thus, the key levels I give will be important to note.
Another steady, but distinctly unspectacular day is expected again.