Yesterday’s warning was timely. This even extended to the U.S. indices. From here, the risk is slightly different, although still within a general template, and we could see this extend to the end of the week. Broadly, I could suggest that we’ll see consolidation, but there are one or two currency pairs that are likely to generate new highs or lows. This should still be seen in terms of the general expectation of seeing a general swing type development.
Of some disappointment was the sooner-than-anticipated reversal higher in EUR/USD, but the break of the declining channel high was a clear signal. Equally disappointing was the limp performance of GBP/USD. The past couple of days, it has had the look of a limp handshake – hardly generating much confidence. Even the lower degree structural development has been dreadfully complicated and hardly generates much confidence. However, it now has very little wriggle room, and needs to make a more defined statement – once it makes up its mind, we should see a firmer follow-through.
As for the Antipodean… oh! What a mess! As a basic explanation, it hasn’t really hit a projection target (although was relatively close), and even then, the internal development was hardly an advertisement for impulsive waves. It does tend to suggest the potential for a more complex correction, but being irregular does mean we need to sit out until there is a stronger signal.
USD/JPY capped almost perfectly, but certainly in the right area. Its first foray lower was also spot-on. Even so, EUR/JPY was influenced more by EUR/USD, and this is likely to be repeated today. I doubt that USD/JPY will remain firm for very long, and therefore, the impact from both USD/JPY and EUR/USD will be key to the movement in the cross.
There should be some decent moves today, although don’t expect the world.