I thought all was developing well in terms of the correction lower in the Dollar before I laid my head to rest on Friday evening. Therefore, you can imagine my amazement when I saw the Dollar strength which I had not even dreamt of during my slumber. The reasoning behind my expectation for my call for a deeper correction lower in the Dollar was down to the Wave -c-. Probably 90% (or more) of Wave -c- projections are 85.4% or more. The Dollar low we saw in EURUSD implies a mere 61.8%-70% projection - quite a rare event...
However, we have some work to do before these targets are seen and it’s not going to be a one-way affair. Indeed, I doubt we’ll see a strong follow-through today. This is certainly reflected in EUR/USD and USDCHF. That GBPUSD didn’t react as strongly to the other two Europeans is not too much of a problem. The general structure of the needs for all three, are basically the same but GBPUSD has a different structure to the other two. It could even maintain the sideways consolidation.
The Aussie, from this point, is beginning to suggest a more independent development to the Europeans. Yes, there is risk of consolidation but even this suggests some weakness today. It will be well to take care and note the structure in order to try and confirm which route it will take.
As for the JPY pairs, it was a tale of two currency pairs… USDJPY edged a little lower while EURJPY decided to dip more than its toe into the decline. That has made life a little more difficult in the cross and it may well be useful to hold off from holding an excessive position until USDJPY lets us know its intentions. It is in a correction but one that has a relatively large range given it’s correcting a rather large rally – but one which is paired with an earlier deep correction. Rather than playing around with the downside it’ll be better to observe for signs of bullish life stirring again. That will also be the trigger for EURJPY…
Nothing really stands out as a clear winner today. There is potential, but patience will be required to ensure the entry is at the right point…