EUR/USD And USD/JPY Stand Out During Morining Trading

Friday’s dollar losses were looking quite good, but today’s open has tended to destroy the bearish outlook, at least in some pairs, maybe all. While not showing in the charts there seems to have been some heftier gaps in pre-broker trading that need to be assessed to judge whether everything has broken down. These early gaps, often seen in New Zealand trading can occasionally be “games” played by Kiwi banks that eye institutional stop losses and the chance to profit from them. The problem, in these situations, is whether we should count them as valid trades that impact on charts and levels, or whether we ignore them. The two that stand out today are the EUR/USD and USD/JPY, both of which have seen those lower prices but have not reverted close to Friday’s close. The GBP/USD and USD/CHF have reverted and remained stable.

So we have an extra problem to solve today. Have these gaps turned the dollar around or are they just corrections? Interestingly of the Europeans it is the GBP/USD and USD/CHF that I feel really must see new dollar lows. Can that happen? Has the EUR/USD extended its sideways consolidation that started on the 19th of September? Personally, I have a preference for dollar losses. However, perhaps it’s better to approach this by observing first to see whether the dollar retains the dollar resistance areas and extends losses.

I do see further weakness in the AUD/USD, but possibly not by too much and feel a recovery (at least) is possible but until now we have not seen any confirmed reversal lower (in the bigger picture) so it will be worth playing this will some caution.

Even the USD/JPY gapped much lower. This has disappointed me in that it has complicated the overall bullish structure and may even imply further losses. That is also highlighted in the EUR/JPY which, on the back of boththe EUR/USD and USD/JPY is gapping lower, and is threatening further losses. What is less clear is just how direct these can be. Certainly, momentum in the USD/JPY is now quite bearish so the bias is definitely on the downside. That EUR/JPY has broken quite a few supports the risk is also lower and if I look at the daily picture may risk quite a drop. Though best wait for confirmation of a break of support.

Thus, we have a difficult start to the week. Best wait for things to settle and the uncertainty to disperse.