While we did get some modest moves yesterday they weren’t quite as firm as I had wanted to see. While one or two of the Europeans have a structure that could trigger firmer moves there are also others that have not completed a particular section of a wave and restricts the ability of the Dollar to make any stronger move at this point. In particular USD/CHF is a little behind EUR/USD and GBP/USD has developed in a manner that could maintain its own consolidation. I’m therefore not confident that we’re going to witness any strong moves today.
Thus, the risk today is for range trading and quite possibly mind numbingly boring. It will be well to also note the boundaries of the range that would provide the trigger for a breakout just in case any catalyst raises its head to push the Dollar one way or the other.
An alternative angle to observe is in EUR/JPY to judge whether this can provide any insight. I have been playing the “range trading” card here for a couple of days and while it has done just that it has been extremely static overall. The more this develops without making a modest shift on the upside the risk of a larger move will be highlighted. If anything it’ll be more likely that USD/JPY takes up the slack here rather than EUR/USD. Perhaps it could even be both but I suspect that is less likely at this point.
Having said that USD/JPY is still restrained within its own, very sluggish structure. It should be closer to completion but the development has been in slow motion and at this point it’s not really showing much determination to breakout on its own. However, here too, the requirement is to understand where the break levels are.
Finally the Aussie managed to make further gains but not yet enough to confirm a resumption of the upside. Thus, until the break higher is seen there still remains a risk of a slightly deeper correction. Thus, bide your time and maintain patience.