Gosh, following the extraordinary events on Friday – the hype, the adrenaline and the largest one-day move in the current financial markets – it has been a bit of a let down. Perhaps it was a head-rush that caused the market to fall into involuntary shock.
Maybe there are some who are counting the costs – I see from George Soros in particular. It tends to suggest that fundamentals are not the be all and end all of how to approach forecasting a market. However, I suspect that strategies are being laid.
As I’ve followed the individual pairs I’ve noted a lack of intensity. They seem to promise the downside – but then back off. It tends to suggest the potential for corrective patterns and perhaps could be equated to a mini-version of the sideways consolidation that we’ve seen in EUR/USD since March/April last year.
Perhaps there is a fear of committing to a bullish dollar following such a move, in case the bigger players will wipe them out before committing to a dollar follow-through.
Whether this may be the case or not, the market is clearly nonplussed at the moment. The movement between EUR/USD and USD/JPY is neutralizing EUR/JPY – although appears to have a basic upward bias driven by USD/JPY – that has broken above the 4-hour Price Equilibrium Cloud.
Rather surprisingly, following the up-down-down-up in USD/CHF, it appears to be making amends for its indiscretion. Even then, I can’t see particularly strong momentum.
Down under, the Aussie appears to have given up too, backing up from the sharp losses on Friday and perhaps being polite… “after you… no, no… after you old cobber…”
Somehow, I sense we’re going to eek out this week in a rather disappointing anti-climax as we wait for possible loss-cuts by those who didn’t anticipate such a move as we saw last Friday…