Whoa… that was one wacky day. That USD/JPY seemed to be fueled by a rocket was the highlight, closely followed GBP/USD – that triggered a healthy rally in GBP/JPY. Interestingly, as an aside, the Brits and Japanese are pretty similar in character in many ways but I’m not sure that has any relevance to what occurred yesterday… However, that was quite some ride. I think GBP/USD and USD/JPY will pull apart now. The excitement of the strength in GBP/USD – that was expected but I hadn’t anticipated the acceleration we saw. The pound should now revert back to the downside. USD/JPY has not quite completed its rally – but it’s early days and most likely we’ll see some less aggressive moves for today.
Now, two pairs that sprung a surprise were EUR/USD and AUD/USD, both penetrating prior highs. I think I’ve come to terms with this but the outlook, in the larger picture, are still very different. For the moment they both agree - to an agree - to see losses. When talking about trends, it’s the Europeans which have the hangover from Brexit that can generate more emotion - and therefore firmer trends - rather than the Antipodean. I tend to feel that the Aussie is still in a daily consolidation.
Clearly, EUR/JPY benefited from the super-hyper USD/JPY breaking above 103.38 (and there was me thinking, “oh this should hold for a while…”) It may well benefit from the upside in USD/JPY today, but with a stronger lag this time with EUR/USD unlikely to repeat yesterday’s rally. Also note the steep bullish channel that may well break but there may still be risk of a recovery following the break to retest the channel line – but at a higher high.
The Europeans look steady – the Aussie also. It’s just the JPY pairs that have the stronger risk…