The NFP clearly had its impact. I could have kicked myself in EUR/USD. Since the 27th July, I had the target for the top between 1.1225-75 but failed to notice the deep Wave (b)/(v)… Thus, the direct break below 1.1092 has provided us with the next phase. However, there is still some confusion in GBP/USD that bugs me and USD/CHF required a lot of attention in the rally from 0.9521. Therefore, there are still some kinks that need to be attended to.
While Friday’s release obviously provoked a sharp move higher in the Dollar, it hasn’t been a rip-roaring, guns blazing move and I suspect we’ll return to a sense of “normality.” Frankly, that has been the general norm since April 2015. Trend? Who wants a daily trend? (Well, I do!) Seriously, look at the daily chart in EUR/USD from the 1.0462 low around the middle of March last year… So basically, while I could make a fool of myself, the odds favour a reversion back to the previous status quo. Indeed, there are several options open so I think we need to tread carefully today.
The Aussie has hardly been an easy pair to follow. Friday’s reaction was a lot less frenetic as compared to the Europeans and there is a strong chance that it will be a renegade and continue with its addiction to the upside. The only caveat is that it wouldn’t take too much on the downside to complicate the outcome. This is another pair that has a less than stable structure at the moment.
Finally, the JPY pairs… USD/JPY reacted along with the Europeans with the gains in the Dollar. The decline from the end of July has hardly been an exemplary example of a trend. It is now at a point where it either needs to see a break higher – or, of course, a break lower. If I look at EUR/JPY, I can’t see that we’ve completed the downside that suggests that either USD/JPY or EUR/USD must drive that move. From my comments above on EUR/USD, that tends to suggest that it will be USD/JPY…