For much of yesterday, we did see some deathly dull consolidation – which did not surprise. I’m not sure what happened, but clearly some fundamental event has taken the development a step forward. Until that point, there were some uncertainties about the foundation waves under development. The “event” appears to have resolved that and should now clear the way for the next move. I’d love to say that the move could accelerate at a faster pace, but that hasn’t been the pattern of late. If this does occur - then great. Otherwise, we could see the steady development that has been the daily ritual for some while.
The Europeans are looking correlated for the moment. All seem to be under the bewitching influence of the bullish dollar. However, I do expect GBP/USD to veer away from the Continentals at some point once again. There could even be some consolidation in the pound as well. I have held targets for GBP/USD for some while, but the development has been so frustratingly slow that it’s taking forever.
The Aussie’s recovery was limited, but has developed in a manner that it could move sideways. I doubt we’ll make a new high, and therefore, there should be losses, but it’s the depth of those losses that needs careful attention to determine whether there is a stronger follow-through. Therefore, take care and note momentum conditions.
As for the JPY pairs – a disappointment with EUR/JPY that broke below key support, while USD/JPY managed to stage another rally. It tends to suggest that the upside is probably limited in USD/JPY, with the cross likely to continue its decline. Therefore, take care with USD/JPY.
It should be a steady day, although the customary Asian session will provide a dull beginning.