The US Dollar extended gains as expected but now very close to the limits and because of the approximate targets the risk of missing out is high. As described yesterday, the erratic and noisy development remains and adds another risk in terms of trying to aim for the perfect target. Indeed, I can envisage today’s trading as being rather crowded for a while. In addition, there are some “clunky” waves in one or two currency pairs that could promise much but in the end, deliver little.
Thus, at some point, the Europeans are going to revert back into the range. In particular, GBP/USD has a structure that looks like continuing sideways in a very clumsy, languid structure. It has the potential to feign a move one way but then go the other. From this point of view, it would be beneficial to let it make its break and from that outcome we can see it begin to home in on a target. The Continentals are more likely to provide one more Dollar high before seeing a reversal.
The Aussie developed well and still has a little way to go. This has an initial target that can be identified but after that the next target is a little more vague. Thus, use momentum and price patterns to identify the limit here.
USD/JPY extended gains but not to target. It also has a rather difficult structure and therefore the same advice of leaving it well alone and watching for reversal indications is preferred. That EUR/JPY still has downside to go is more suggestive of USD/JPY providing the catalyst rather than EUR/USD. Therefore be aware of the interconnections of all three pairs to judge any sooner than expected break.
It looks like being a more difficult day today compared to yesterday. Don’t take risks and be certain of your trade set ups.