Ouch … The correction I expected was nothing like the pullback I had envisaged. Instead, in EUR/USD and GBP/USD the dollar plowed higher and basically almost completed the entire move rally. This tends to suggest limited gains from here on. Most likely we should see a pullback lower in the dollar and later new high over – maybe today - or into tomorrow depending on how the market decides to react.
While all the rush and fever in EUR/USD and GBP/USD, the other two majors quietly looked upon their brethren and forgot to react. USD/JPY should see a minor follow-through and later a recovery. Equally, USD/CHF should rather remain in a sideways move. The reasoning comes from the fact that EUR/USD and GBP/USD appears to have limited dollar upside and over the week a firmer correction. GBP/USD may well have completed its decline.
We may have seen the Aussie complete its Wave v but take care. Either we’ve seen the low – or will see limited follow through before the reversal higher. I also suspect that EUR/JPY has found a low for now and may well begin to see a ragged pullback higher…
Take care over these limited dollar gains.