There was some good and not-so-good yesterday. The Europeans developed well – even if I basically pulled back from the complications that GBP/USD has got itself into. Actually, remaining neutral was the right outlook. However, both EUR/USD and USD/CHF developed well and overall in line with expectations, even hitting the 0.9788 target (+ 1 point)… We should see a less directional day today but not significantly so… As for GBP/USD – still best to sit out. Very much a dangerous outlook, but does still seem to have some downside.
And talking about dangerous… the Aussie… The entire development from the 0.7495 high has been a weird, weird and errr… weird development. I had taken the break above 0.7350 as the end of the decline. I’m not so sure now… It’ll mean being a bit defensive until the next larger move is seen – and therefore take care. I am more attracted to the downside because of the general strength of the dollar.
EUR/JPY has also developed well – pretty much as planned – but hasn’t really been helped by USD/JPY that has deteriorated into a nervous wreck. I have been trying to consider both bullish and bearish impulsive alternatives, but neither seems realistic. Therefore, it tends to suggest a complex corrective pattern. From that point of view, it looks bullish, but take care. It tends to make sense because EUR/JPY does also seem to require a correction higher before too long.
So out of all of the pairs, it looks like EUR/USD and USD/CHF have the clearer outlook, even if there is a correction looming.