Yesterday saw a rather strange day. Probably USD/JPY will have taken the limelight with its early tantrum followed by a rather ragged but bullish rally. At the other extreme, USD/CHF decided that it wanted to try and test the 0.9858 low – but stalled just 0.9867. This has now confirmed a triple three in this Wave -ii-. Even EUR/USD decided to provide a second zigzag – just 5 pips below the (cyan) Wave -ii- high at 1.1752.
However, towards the end we have seen a 5-wave decline from the dollar lows. This tends to suggest a potential sideways consolidation in the Asian center and by European open they’ll likely provide the next 5-wave decline. Perhaps GBP/USD will provide the impetus for the next set of dollar gains given that it’s already on the way lower. Even AUD/USD has topped out so we can see a general consensus for the dollar rally.
As I began with USD/JPY, it is now finding a turning point for a pullback – but I doubt a deep correction. Overall, we have quite a robust rally beginning to develop and that will provide a fine battle to see which pair will see stronger gains. My guess is that since Wave iv in EUR/JPY was broken to see quite a decent rally, we may just see a battle between the two. Overall, in the long run, I suspect EUR/USD will be the “winner.”
Take the early session as a stepping-stone for dollar gains.