Indeed, an indifferent end to the week that kept all currency pairs limited to relatively tight ranges. It does beg the question of when this introspective trading will finally come to an end. Actually, I feel quite soon. I’m not sure today will be that day, but there doesn’t seem to be much more room to accommodate the current corrective pattern.
Certainly we continue to retain a cautious approach and while short term, more scalping type trades are favoured, the process should be to confirm a possible outcome within the consolidation. And, should it develop, a breakout will be highlighted. I suspect that today could well see some more dollar bullish developments. This does seem implied from the USD/CHF and potentially the EUR/USD. In the GBP/USD sideways meandering and lack of new highs could still keep the development more defensive. Therefore even this pair could be susceptible to dollar strength.
The AUD/USD has been flirting with key support, but for the past day and a half has made some progress. However, not enough to suggest it has confirmed either the upside or downside. The next break should set the tone for the coming week and maybe longer.
The USD/JPY has also been flirting with both upside and downside limits without making any defined break. It has remained in a relatively tight range for almost two weeks and needs to make a decision soon also. There’s one scenario that could suggest it could happen today, but there is a possibility it may extend the status quo for another day or two. However, the important issue is to understand when it makes the break and the implications. The EUR/JPY is even more indifferent having dipped back lower on Friday, but is still in an area where it can still make decisions in either direction.
Thus, it should be another cagey day. I suspect overall with dollar offering a mildly bullish outcome.