Dollar Steadily Bearish - But Keep In Mind The Need For A Correction

I’m talking about the European currencies at this point. There is no doubting the downside right now. Even USD/CHF broke marginally below the 0.9077 low and thus points to further losses to come. However, currencies don’t (often) move in straight lines and this is most definitely the case right now. I remain bearish but I’m not sure much of today will actually be dollar bearish. We do seem to be within spitting distance of a temporary pullback – nothing extensive but just a normal common or garden correction within a trend.

Taking a step back, one point I have noted is that all Europeans – and U.S. Indices come to that – are promising very similar outlooks in the daily picture. Broadly this mean continuation of the current trend a correction and then a final extension. Once that’s done I see both the dollar and U.S. Indices throwing a fit. When will that be? Good question. Timing is one of those ephemeral issues that I have not fully studied and the input I get from cycle sources, while at times very, very accurate tend to vary in success with the main feature being unable to determine whether it will be a strong reaction or just a minor blip. If I stick my finger in the air I’d say by 1-2 months…

So today, take it easy and note the areas that have a higher risk of providing a short term dollar low and look for the correction.

USD/JPY spent a lot of time doing very little but finally headed higher as expected. Even here we’re close to an intermediate high so don’t expect fireworks today. Indeed, when this reaches its final high we should see several days of a correction lower but still within the underlying uptrend. EUR/JPY has pressed the general targets I have been contemplating and with momentum still strong we have to look for further extension higher. It should be limited today though, again a correction then expected.

Thus, overall, it’s not a day to expect super trends and the general development is likely to be more corrective and choppy.