The market chose indecision.
I do have to raise my hand to admit that the indecision was a little more profound than I had anticipated, so much so that it has raised an element of doubt.
However, taking the US Dollar Index as a marker the basic trend does still appear to be bearish, but now with limited downside. This lowering expectation of losses tends to make sense given the greater risk is to the upside in the USD/JPY, lower in AUD/USD and quite limited upside in GBP/USD. It does suggest the potential for a rather volatile development in the Dollar Index.
So as we start the day/week there appears to be a need not only for some flexibility, but also for observation of the balance between the individual currency pairs and the expectation for the Dollar Index.
This should see the Europeans gaining against the Dollar more directly but with the need for a mildly deeper correction pretty early in the day. Perhaps that’s hardly surprising given the norm during the Asian session. This also seems to be implied by the combination of the hourly Price Equilibrium Clouds which are providing Dollar support (in the hourly chart) while the 4-hour Clouds are providing resistance. We could find this as a feature for the first few hours. The same can be said about the GBP/USD and even AUD/USD that risks some sideways consolidation before the Aussie resumes the downside.
In the USD/JPY we saw some constructive gains before a pullback later in the day. This could well see some further minor losses but I don’t think they’ll be too deep before the upside renews its strength. This is supported by the EUR/JPY that just poked its head above Thursday’s high, really not by much, but does suggest the risk of direct gains which could point to limited losses in both EUR/USD and USD/JPY.
So, the day looks like starting on a slightly complicated note but should begin to see smoother development as it progresses we should see a greater sense of organised development.