The world’s markets are shunning anything to do with the EU it seems. The Christine Lagarde development is hardly encouraging any sympathy as we approach the Brexit referendum next week. Global stock markets have weakened and the general expectation of a larger fall-out for the world’s economy does seem to be a stark threat.
EUR/USD failed to make any further gains and even GBP/USD broke below the 1.4114 low after a brief attempt at a recovery. It’s hardly an encouraging outlook and has surprised me – my preference for a deeper pullback has been stifled each time. It certainly doesn’t look like we’re going to see much upside, if at all…
Having said that, there are a few pairs that reached key ending waves, so we do need to give respect to the potential for some dollar downside movement – but frankly the market is very obviously hungry to keep pressing the dollar higher against the Europeans. This is even applicable to the Aussie.
Meanwhile, the JPY pairs also extended losses – USD/JPY appearing to follow the dollar losses while EUR/USD also pressures EUR/JPY to the downside also. Frankly, it looks like we’ll see that trend continue even if the market baulked breaking the 105.54 low by just 8 points.
So, we are witnessing some interesting times … If all else fails, buy dollars but take care in USD/JPY…