There appears to be something afoot… something not quite right. I can’t say yesterday was exactly as planned. It started off quite well, but then the general balance between the pairs began to creak at the edges.
While the dollar dipped lower for much of the day as I had been looking for, it tailed off by the end of the day. That has left USD/CHF lagging well behind EUR/USD in terms of direction and has begun to sniff out the 0.9648 high with the 0.9656 high only half a sniff higher. Thus, when EUR/USD failed to make a new high it began to put doubts in my mind.
Equally, when considering the Europeans as a group, GBP/USD has also begun to struggle. There may be some further dollar slippage with reversal indications not really very strong but, as I mentioned, I feel a little wary of committing to a firm outlook today.
Even the Aussie has a duality to it. Yesterday’s recovery was particularly ambiguous. I wanted to call it as an impulsive rally but there were too many twists and turns to be absolutely certain of this. This either means we’ll see a correction lower and followed by a second rally – or direct losses. It’s actually difficult to be certain of which will occur. Thus, don’t over-do the position size until there is a stronger signal.
Guess what? USD/JPY is also ambiguous… However, even if it sees a break below yesterday’s low, it won’t be by much, and more likely we’ll see gains develop. Then we’ll need to work with a vague EUR/JPY. I have been expecting a break above 114.02 but the market appears to have a slight reluctance to push higher. I think this may provide some gains, but it very much depends on how strongly EUR/USD will perform.
In summary, it’s not an easy outlook today. I’m pretty certain of the larger picture but today could provoke some messy surprises…