A Plethora Of Scraps

Scrappy, scrappy, scrappy… As far as the eye can see. This scrap, that scrap… indeed, enough said… So what are we in store for today? Err… more scrap… However, slowly, slowly - bit by bit – we’re working through some of the crud that occasionally comes along and from what I can see there is light at the end of the tunnel, even if partly blocked by … well, you know what.

Despite the mess, we are seeing the Dollar edge lower in general. I think it’s pretty obvious that it would be difficult to call the development “impulsive” and therefore we are basically seeing the corrective activity I outlined, even if it has been a tumultuous pathway. It doesn’t look complete and remains likely that we’ll need to pick our way through the garbage heap en route to the destination. This relates mainly to the Continental Europeans, Aussie and USD/JPY, all of which have suffered from multiple twists and turns.

The exceptions are really GBP/USD and EUR/JPY. The former suddenly had a rush of blood to the head and broke above 1.6276. This could be an important break but I do note one alternative. For the moment I think we’ve seen all we shall for a while. The next test is of key support that will tell us whether we’ve seen a low for now or that yesterday’s blip higher is a devious plan to trick us all. I’m open to both but mainly because the market is somewhat perverse at the moment. Caution is still required.

While EUR/JPY made further gains, it struggled. However, it has been positive and still in line with expectations. It should make further headway but is facing a deeper correction before too long – a factor that seems to confirm the expectation of more two-way scrappy development in EUR/USD and USD/JPY. However, one of them has to provide the catalyst for the deeper correction, maybe both, which could be a better option from what I see…

Thus, remain on your guard. Mind the scraps…