In general the market tends to move en masse in the same direction – either dollar bullish or dollar bearish. Of course there are plenty of instances when currency pairs diverge but, following my break last week, I am finding that we may be seeing some rather unusual divergence between the mix of pairs I follow.
Firstly, for a while, GBP/USD has done its own “gig” and appears pretty much aligned to its own whims, while both EUR/USD and USD/CHF have tended to develop in tandem. There is a chance, for at least part of the day, that all three Europeans may well correlate quite well. I’m not certain we’ll see that be maintained over the course of today. For these pairs it looks like a slow day being in a corrective phase. However, as the day wears on, I suspect GBP/USD will break away from the Continentals. This could happen over the European session – and more likely through North America.
There’s a good chance that even the Aussie will move side by side with the Europeans for most of the day. It does seem to suggest a pullback lower, even if yesterday was a relatively dull and boring one.
As for the JPY pairs, I have struggled with EUR/JPY. Its structure is really quite ragged but it appears to have retained a bullish outcome, and this tends to match with USD/JPY. Both still require a little more development to provide confirmation – particularly in USD/JPY. There’s an hourly bullish divergence, but we’ve not even broken above a prior corrective high. Therefore, we need more patience to confirm a bullish outcome.
Thus, the first half of the day – perhaps a bit more – appears to be important…