I was prepared for some dollar weakness but had not envisaged the degree of weakness that occurred. It does look to have clarified a few things, although trying to follow such frenetic moves can be hazardous to wealth. In the end, I have found the levels we reached quite interesting.
For a start, the losses in USD/JPY have triggered an outcome I had always expected, but hadn’t thought that it would be direct. The next move may well be sideways, but there are several options, and until we have seen a little more development, I cannot be certain of the subsequent alternatives. Where it should finally make its final move is already known within a range, but there’s plenty of time before that outcome.
That USD/JPY has dragged down EUR/JPY tends to follow-on from the caution I mentioned yesterday. I tend to see EUR/USD and USD/JPY relatively correlated, and therefore, it could end up as a sideways consolidation for a while.
Now, the Europeans… were… umm… interesting. The severe weakness in the dollar took some time to analyse. USD/CHF was pretty easy and, while slightly deeper than I had wanted, stalled almost perfectly at a deeper retracement. EUR/USD – while I obviously not having anticipated yesterday’s high, it was a pretty interesting level. In fact, it was 50%. I am not exactly 100% certain of the internal structure because it was moving so quickly, but matched with USD/CHF, these levels were very critical. However, the reversal indications haven’t been the best, so we need to take this step by step.
Finally, and also quite interesting, was the resumption of losses in AUD/USD. I had mentioned in yesterday’s video outlook that the move to 0.7408 did provide the minimum requirement for the correction – but that it was a correction of only 2 bars in the daily chart made it difficult to believe that the correction had completed. Yesterday’s losses tend to confirm that we’re back on a strong dollar outlook…
Remain cautious today – the market may need some time to adjust.