The market took the fragile nature of the Europeans and reverted back to the preference for a complete lack of commitment to either direction. It seems as if the market just cannot complete a normal sequence without finding the most convenient excuse to bottle out of a follow-through. Very clearly this is extremely frustrating and deepens the Sudoku-like puzzles.
I can see potential resolutions although these need to be choreographed across the Europeans which all reacted in a different manner in terms of their individual structures. I still tend to feel this is more indicative of Dollar gains but having had my fingers rapped once again, the prospect of stretching them out again adds the trauma of them being rapped once again. I’d therefore much prefer to take the next step with caution to test out my expectations and if I take any particular currency it’ll be EUR/USD that seems to suggest further consolidation. The other European that has any sense of structure is GBP/USD although, even this saw a wretchedly deep correction but then followed by losses to a new low. This also contributes to my basic dollar bullish view.
The AUD/USD flapped its wings, looked around and thought “what the heck… can’t be bothered…” Again, this is complicated but overall I favour the downside here. It’s just a matter of overcoming the current paralysis.
The most interesting developments seen yesterday were in the USD/JPY and EUR/JPY. The key resistance in both broke and this has opened the door to the outlook I pointed out in the weekly video. I would have preferred a new low, but I’m now not going to fight any further strength. I will warn that I don’t think we’re going to see rabid gains but more a process of base building. So, neither of these two will strike any scintillating moves just yet but I suspect by next week we could begin to see a few sparklers before the Europeans manage any breath taking developments.
Take care today. I do feel it will be a two-way day across all currency pairs.