Further dollar losses were seen, partly as expected, but the extent of the losses surprised in the Europeans – even AUD/USD. Has this stronger move to the downside broken the larger daily structure? Not really, but it does place a little more uncertainty over the next move. Across all four markets hourly momentum has provided Dollar bullish divergences although this is not matched by 4-hour momentum. Having said that, in the Europeans it has hardly seen much of a trend. This forces us to approach the next move with care and to note the key areas that make or break a move on both sides of the market.
Both EUR/USD and GBP/USD have lows nestling in their respective 4-hour Price Equilibrium Clouds while in USD/CHF the 4-hour Price Equilibrium Cloud is still some way above. The Aussie has the same situation that its 4-hour Price Equilibrium Cloud is a little way below. These should be the areas to focus upon and we’ll have to see whether the market pushes for breaks.
USD/JPY remains extremely vague. Momentum remains on the soft side but over the past weeks it has generally followed a more correlated path with the Europeans in terms of the Dollar’s movement although, more recently has been slightly weaker than the Europeans, as highlighted in EUR/JPY. That we have no bullish divergence in USD/JPY concerns – but I also see an extremely ambiguous structure that seems to have corrective development on both sides of the market. Hence, I remain sitting on the fence and waiting for a stronger indication.
The chance of any significant move looks unlikely for the first half of the day – at least.