While I think this will be an interesting week, it may not seem like it today. While I hadn’t expected the dollar levels reached on Friday, they were actually the eventual areas I had envisioned – just earlier than anticipated. This should imply a relatively slow day today – unless a major catalyst develops that causes the market to go haywire. At this point, there doesn’t appear to be much risk in this drowsy, risk averse environment. However, there is just one puzzle I find difficult to resolve – and that’s the balance between EUR/USD and USD/CHF in their respective positions. Something appears to be wrong here and I’d like this to be resolved.
EUR/USD has a mild hourly bullish divergence but bearish in 4-hour momentum. USD/CHF has a mild bearish divergence and potential for a 4-hour bearish divergence but appears to require another high. This is supported by the position of the respective hourly & 4-hour Price Equilibrium Clouds. Therefore, we’re going to have to take care – maybe allow for a minor new dollar high. This tends to be reflected in GBP/USD in structure, momentum and Price Equilibrium Clouds.
We have the same situation in AUD/USD also – but just a cycle out. There appears little room on the immediate downside but modest gains on the upside. So overall, the Europeans and Aussie appear to suggest a limited range day today.
As for the JPY pairs… To be honest, they are both likely to have similar limited range days today – much the same as the Europeans/Aussie. I do have some larger expectations, particularly in USD/JPY, so it’s something to be mindful of, but for now there are still some final tying up of some loose structures before a more interesting outcome…
Steady to sleepy should be the basic expectation…