Overall it was a pretty successful day yesterday. There were two options on how the Dollar would move higher and it has clearly taken the slow route. I suspect we shall see that continue today with the targets remaining the same as yesterday in both EUR/USD and USD/CHF but a little more flexible in GBP/USD. As long as they reach targets then it will favour the more conservative end result I outlined yesterday with specific target areas but which will also require some confirmation as the targets are approached. Any significantly different development would raise more concern and will equally require a more flexible outcome. Overall this tends to suggest a basically choppy outcome so be aware of limitations to trends.
The Aussie reached its retracement target with 1-point slippage. Therefore, we should be looking for further gains to the target area. Overall this could still have a sting in the tail but once the current upside target has been seen I’d suggest a lot more care on the move lower.
The JPY currencies had a strange day. The losses in USD/JPY were acceptable and the move back to 102.00 – just 2 points above my upper retracement target. The sharp reversal lower was fine but the deep correction raises some concerns. There are now a few alternatives on how this can either be resolved in terms of a correction, or how the next leg should develop. It’ll require some care and understanding but could be quite difficult to trade through. I’d suggest spotting short-term opportunities until this is resolved.
The early movement in EUR/JPY did not come as a surprise with the limited gains and subsequent losses. However, the depth of the move back higher is just a little puzzling. My favoured view is that it should move back to a prior high but this may not be consistent with USD/JPY. As with USD/JPY, it will probably be best to be aware of alternatives here…
Most likely another slow to steady day today.. and most likely in that order…