I’m not sure whether yesterday was a success. EUR/USD performed the best and USD/CHF performed but half-heartedly. Given that USD/CHF still needs to recover a little more, it’s a bit difficult to consider the two Continentals as developing in a correlated manner. That GBP/USD gave a limp performance has provided it with an hourly bullish divergence. Whether this will be confirmed by a break above resistance is still yet to be seen. Thus the Europeans, while having some potential for stronger moves, need to make that intent known else we could end up with a damp squid of a day.
The Aussie had a quiet day also. One would imagine that it would be easy to see a larger recovery but in this position it is finely balanced between the upside and downside. We do have the 4-hour Price Equilibrium Cloud pressing lower and could well provide the catalyst for losses – but there is a band of resistance just above that should be considered also.
That USD/JPY moved sideways within the range I indicated as important – but without a break – is rather frustrating. Still, It has been a corrective move as things stand right now. There’s always room for complications in corrections and therefore we need to remain cautious until this range breaks. Otherwise, yesterday’s outlook remains the same.
The lack of gains in USD/JPY and the expected losses in EUR/USD killed of the chance of a new high in the cross. Still, it had been a rather complicated development in the latter stages of the rally and given there has been no break – or even test – of a key reversal target, there remains a need to be aware of both sides of the market here. The most likely biggest driver of any bearish development in the cross is, most likely, from EUR/USD. Even then, there is a scenario for a deeper correction in EUR/USD. Thus, take care with the cross…
There is a faint hope of a move directional move today, but we need to make sure that the right breaks are seen.