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Dollar Remains Bullish

ByIan Copsey
Published 05/27/2014, 01:05 AM
Updated 07/09/2023, 06:31 AM
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While Friday’s trading did provide a dull end to the week, yesterday’s U.S. bank holiday lull extended the same impact. Having said that, there were some telling developments from several factors: momentum remained dollar bullish overall, failing to break below the Price Equilibrium Clouds while the dollar has not corrected enough to force any breaks. An even more important development was the depth of the losses in EUR/USD that is infringing on earlier parts of the structure that enforce the bullish dollar outlook. This therefore remains the dominant force. What we are now navigating are corrections across the board.

In particular the above relates to the Europeans in general and to a lesser extent to AUD/USD. The Antipodean is at a more advanced stage of its decline and currently preparing to dip its toe into deeper levels. The minor issue that remains is whether we shall continue to see range trading or direct losses. Overall, this should still be within a bearish outcome.

USD/JPY surprised on Friday, moving higher than expected and tends to point to a more advanced stage of its decline. While a stronger recovery within a decline may sound counter-intuitive, we are talking of relationships with earlier corrective highs and it is this which is providing the hint. From this point we shall therefore have to tread a little more carefully as we approach the targets I set at the end of January.

Overall this should retain a bearish bias in EUR/JPY, both from the point of view of what should be a weakening EUR/USD but also from the near-term expectations in USD/JPY. This would suggest that we should see a reaction lower before too long.

While the early part of today could remain defensive, as the day moves on we should see potential for a stronger move.

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