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Dollar Due For A Correction?

ByIan Copsey
Published 07/10/2013, 12:55 AM
Updated 07/09/2023, 06:31 AM
EUR/USD
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GBP/USD
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USD/JPY
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USD/CHF
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EUR/JPY
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DRP
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It was a strange day yesterday - EUR/USD generated a surprise with the depth of its recovery to 1.2897, a level I hadn’t expected to be tested. That GBP/USD and USD/CHF ploughed on with their capitulation against the Dollar added to the confusion and only around 5-6 hours later decided to collapse and join the other two. However, the Dollar highs seen don’t really add up in terms of the projection targets and appears to suggest we’re closer to the deeper correction that I had suggested at the beginning of the week. By that I mean in terms of time rather than extent. The larger degree projection targets remain the same but this has required a lower degree re-jig.

It looks like the first half of the day could be take up with a correction, maybe a bit more, but overall I still feel we should be looking for additional follow-through later.

While the Dollar extended gains against the Europeans, the Aussie decided to make its own way. At last this seems to have confirmed the low at 0.9036 – 4 points below my adjusted target – was the end of the larger daily decline. It should make another high today but don’t expect the double bottom target to be reached directly. A correction should be due.

EUR/JPY finally managed to reach the 130.27 high – and just above – but then saw the drop in EUR/USD take it back lower as expected. It seems to be setting itself up for further losses but we still need USD/JPY to make a new high also. Once that’s done we should begin to see deeper losses. In the cross I feel we need to pay a certain amount of attention to the individual speed of development between EUR/USD and USD/JPY. I feel this could be quite crucial in the early stages.

Overall, expect a quiet start to the day but quite possibly a much more “entertaining” ending.

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