I was rather disappointed with yesterday’s developments. I had been hoping to see a stronger resumption of dollar gains but it tended to peter out far too quickly. It doesn’t really break any structure. Actually it looks quite valid – although the lower degree development was noisy enough to raise doubts. The implication that comes from this is that we really need a solid move now, one of the longer projections, to actually satisfy the outcome I want. That in EUR/USD and USD/CHF we have not seen a break of dollar highs – and therefore are still technically in the larger range – is also a slight thorn in the side. What we really need is a break of this range…
This caution is definitely required because GBP/USD is baulking the direction in the Continental Europeans with its rally above 1.5588 but which was exactly as planned. Is the concept of EUR/USD and GBP/USD taking a 180-degree opposite direction possible? Well, nothing is impossible an I do note some bearish momentum in EUR/GBP but whether this can be such a dramatic polar opposite is something to keep in mind.
The move lower in AUD/USD also caught a cold. Like its earlier daily correction, I note a similar development but in the lower degree and this could therefore see further sideways range trading for now. There are alternatives but less likely…
As for USD/JPY… some may have heard some blood curdling screaming from the general direction of Tokyo. Even just a 1 point break above 123.71 has dashed the downside and appears to suggest that the 120.41 low was an extreme outlier in terms of a daily correction. Having said that, the upside here is limited for now. Depending on what EUR/USD decides will impact the course of EUR/JPY. That the cross broke below 135.68 tends to make it look more on the soft side and later could see some solid losses. However, this brings me back to the discussion about EUR/USD still holding within range and the need for a break…