I was slightly cautious about how things would go yesterday but I have to say that, on the whole, the moves we saw yesterday were pretty much in line with my outlook. There are one or two issues within yesterday’s development and enough to continue with a cautious approach from this point. Of all the pairs it was GBP/USD that pushed higher more robustly - confirming my suspicion that we’d see a new high following what appeared to be an expanded flat at 1.4148. With this, because of the messy sideways move, 4-hour momentum – even hourly – are not really helpful because we’ll not get any divergences. These aren’t even present in the 30-minute or even 15-minute charts…
This leaves the Europeans with further short-term complications that suggest the risk of some relatively tight range trading today. In particular, EUR/USD and USD/CHF look like seeing a choppy day today.
The Aussie was hardly a model of clear development although dipped into the area of the prior correction. I would have liked this to be a little deeper – and with greater clarity in the structure – but overall I’m basically comfortable with the structure we have now. This should soon see more constructive progress.
The JPY pairs also developed well – slowly. The risk does seem to be for USD/JPY to see some stronger swings but still looking for a new high. With the combination of sideways ranging in EUR/USD and a firmer USD/JPY the risk is for EUR/JPY to extend gains also but without great power.
So it seems we’re back to relatively steady but complicated development. If I have to choose any pair that could generate a more directional move, then it’s AUD/USD…