Dollar Momentum Remains Weak

And the market decided Dollar bearish…There’s no real rabid hate of the Dollar by the look of things but certainly a weakness that has maintained a modest bearish momentum and no real sign of any reversal at this point. However, at this point there is a slight balance in the market between a deeper correction and direct follow-through. The implication of this is fairly simple – that a shallower correction generates firmer projection targets. Which is it to be? To be honest I can’t tell at this stage but I do note that GBPUSD met targets that could provoke a reversal lower except there are no real signs of a reversal. Even here momentum is still pushing the higher extremes in both hourly and 4-hour charts that normally implies follow-through. However, it would be useful to see a slightly deeper correction but that’s something to treat with care, particularly because both EUR/USD and USD/CHF do still seem to have some way to go.

The Aussie joined the Europeans in seeing Dollar weakness. Here we seem to be close to a high. Whether that’s a temporary high and will be followed by further strength after a correction is something to be observed. However, for now I’m not convinced we’re going to see significant strength today.

That leaves the JPY pairs, neither of which set the world alight. Actually, that’s a good sign that points more to continued consolidation which I’d expect at this stage. However, both have drifted lower and closing in on their respective consolidation targets that in turn will allow the drift lower to be a drift higher. Well, some sharp moves are possible but I doubt sustained at this point. This should keep the sideways consolidation extending for some days more and probably into next week. I still maintain that we need new highs but any deviation from the consolidation could force a change in view.

Thus, today has potential to be quite dull depending on whether the Europeans see extended consolidation themselves. Through all this do retain the expectation of Dollar losses which is the side of the market that should see any more sustained movement when it finally develops.