EUR And USD: Battles In The Market

The day started well seeing dollar losses extend as I had expected... but later not as expected… EUR/USD made a marginal new high, GBP/USD edged a little above my target but not too excessively and USD/CHF retested the 0.9253 low. My first thought when seeing 1.3013 was that I had called the 1.3003-13 area as the potential top on Monday and 0.9252 the expected low in USD/CHF.

Maybe, I thought, we’re seeing a retest and I had misjudged the euro high. However, when looking at the structure in yesterday’s dollar losses that would imply that outcome it didn’t add up. Thus, the risk of follow-through today seems to be most likely but I doubt by too far.

I wish that was the only issue. There’s more…

If EUR/USD is going up… then how will that impact EUR/JPY? Well, I could see the original higher target (that wasn’t met) being satisfied. Ok, I can cope with that. I don’t like these little whips that destroy my original outlook but these things can happen. However, the point here is that once EUR/JPY had reached that higher projection we should have seen a much deeper correction – and what we saw at 105.27 doesn’t appear to be enough.

However, we do have to take I into account USD/JPY. My original impression there was that we may be seeing a recycling higher. If that was the case, yesterday’s development certainly didn’t support that outlook. Therefore, it’s left with one of two choices… Going directly higher… or extending losses a bit more.

The latter must surely be the most logical outcome to generate the sort of decline in the cross I had been suggesting. If USD/JPY pushes any higher then the entire short-term landscape changes to the larger underlying outlook and could impact on EUR/JPY… so take care…

The aussie is doing what it does best to create as complicated structure as it possibly can, pushing the limits of corrections and then rebounding. However, at this point the underlying structure is still bullish…

Thus, just a bit of observation will be required. Take note of the key levels that constitute the limits in each currency pair and the implications of whether they hold… or break…