The break had to be extended due to time and my wife's broken foot. So, apologies for the lack of communication.
The big surprise over the break was the deeper pullback in EUR/USD. This did cause the other majors to correct lower in the dollar but not to the extent that would cause an issue. Therefore, the basic expectations I had from before the break remain the same.
Starting from Friday's NFP monthly lottery:
Sometimes I feel the Non Farm Payrolls day is very much like a day off. Well, perhaps not quite, but it only lasts for the final few hours of the day. Bedlam on the release with whips one way then the other until it subdues and decides on the direction. However, as I suggested on Friday, the decline in EUR/USD from 1.1445 was too shallow for the 1.1312 low to provide a follow-through higher. So down it has come.
What next? Well, with the pullback we have seen in EUR/USD from Friday’s 1.1439 we have a modest range on the dollar downside that could be tested but I'm very wary of just direct follow-through from Friday’s developments. In particular, USD/CHF, as far as I can see, appears to have virtually limited downside and more likely it will make a new high. Even then, it suggests a period of initial range trading. Considering that this is the normal reaction from Asia it does seem to make sense that we’ll have to wait for Europe and North America to provide the next directional move.
USD/JPY developed pretty well on Friday to reach 1.5 points below the 114.20 projection target. Now, this is where we need to be alert. Normally, with the Wave [ii] being 56% we’d expect a pullback of around 33.3%-38.2% approx. However, there may be a risk of alternation developing in a deep Wave [b]/[v]. Thus, be aware of the alternatives.
EUR/JPY maintained its rally and appears to have found its highs. If it hasn’t then I can’t see much upside now and better still watch for bearish reversal indications.
AUD/USD is AUD/USD. It looked on Friday that it would complete its Wave v but instead it formed a deeper Wave iv. So now we have to still see losses in 3 waves and in the Aussie’s inimitable way will likely make a molehill out of a mountain.