I was a little disappointed on Friday. I had hoped for more direct gains in the dollar but that was not to happen. Well, apart from GBP/USD that made a 4-point break above 1.3941, basically we saw a slow pullback through the other pairs. This should, over the day, reverse the dollar back to the upside. It doesn’t mean there cannot be a dollar correction lower over the Asian session, but overall we should see the dollar resume its upward path.
However, I do have some reservations in USD/JPY. The structure is a little vague and until 111.12-20 finally breaks. That should provide a stronger follow through. Until then, take care. The balance of the structures across the majors could allow USD/JPY to move higher initially but if the other pairs come to a point where a correction is required there may be risk of a break below Friday’s low before this pair rallies more firmly.
This should see EUR/JPY remain in a range – or perhaps a modest pullback higher – before the 135.18 low breaks. An alternative would be a complex correction.
As for the Aussie, at long last, we are beginning to see it finally extend losses. Again, as with some of the other pairs, we may see a pullback higher early in the day, but overall we should see follow-through lower…