No great surprises yesterday – well, perhaps minor ones – but putting that into the larger picture any weirdness is a mere trifle. The question for today is “will the market have any punch ahead of tomorrow’s U.S. holiday?”
More likely, there could be some movement, reduction of positions or just some domestic chores to balance the books. I won’t actually rule out a stronger move. It is obviously an option but I can see from GBP/USD that it doesn’t have much oomph left after yesterday’s reversal lower. If that happens then there’s going to be a correction. The other two Europeans have room for consolidation but may well have a little more movement but the risk is for limited ranges - or a an attempt to move on but without much follow-through. Basically, we’ll probably see a situation that will allow dull, listless day tomorrow.
If I see any movement, I suspect it may be in USD/JPY. Having been capped twice by the 111.35 high I suggested in Monday’s outlook, any break below the 110.25 low will have obvious expectations. Clearly, that’s not a difficult outlook – one that just about every trader will recognise. Assuming a steady EUR/USD that generates implications for EUR/JPY. I had a longer look at the cross yesterday and came up with a high of 118.12. That it stalled 2 points above is rather a decent call. Now we need USD/JPY to do its stuff.
The Aussie has been a bit dodgy. The 0.7311 low was not an ideal projection target – actually, quite an annoying one to be honest. However, this will imply one of two things – not difficult to work out – it’ll go directly higher or will follow-through lower. Magnificent analysis! If I have my way it'll be lower.