European's Developments Spark Confusion

I’m not quite sure what to make of yesterday’s developments in the Europeans. There has been a slight duality over what needs to happen next. To a certain extent this appears to have been clarified in the EUR/USD and USD/CHF. I can certainly cope with these two as being well within the general expectations I have been outlining. What does puzzle is the GBP/USD. I have been looking for another dip lower but it failed to make much of an effort in either direction. Overall I have been expecting a reaction lower in the Dollar but this seems now to be in conflict with the GBP/USD. While we should follow the breaks I do suggest exercising care as these next moves are ones that tend to be a little complicated and it’s important to get them right to provide a foundation for the next more significant shift in equilibrium.

The AUD/USD failed to surprise but then I have been holding a cautious hand with this. However, it is now time for it to make a more decisive move. Work with breaks and note the general limits of the coming move. I have not been particularly comfortable with the levels that have been seen over the past month, ratios not being as precise as I would like. However, the year-end liquidity factor could be the reason. However, it provides for low confidence levels. Soon it should clear itself up and we should see a more defined outcome.

The JPY pairs. Very indecisive. The USD/JPY really doesn’t look to have an impulsive upside right now and thus I feel the risk is more on the downside. This is basically reflected in the EUR/JPY also but of course in the cross we have to cope with two independent parties in terms of which drives the cross movement. There does therefore seem to be a rather delicate balance in this threesome and will require a balanced approach, noting break levels and targets.

All in all, I’d still prefer to focus more on the Continental Europeans that appear to have a slightly stronger structure.