I have to say that the sudden rush higher in the dollar has generated a very challenging development. I feel relatively comfortable with EUR/USD, less so in USD/CHF, while USD/JPY is still a development in progress. All this needs to be considered with the lone wolf GBP/USD. Well, that’s what I thought as I prepared the report but GBP/USD collapsed. This puts it between a set of alternatives and quite how the rest of the day develops will need some keen observation.
What I see is a day that can see some pretty solid swings, probably more in the second half of the day. How this develops tends to balance on the fine line that GBP/USD reached at 1.2375. Otherwise, the other three majors are likely to see dollar gains followed by a correction.
The Aussie appears to have found its corrective low with both 4-hour and hourly bullish divergences that have taken price above the recent peaks. Therefore, there is room for gains in this pair and it will need to be watched carefully. This seems to be in line with the expectations in the second half of the day.
As for EUR/JPY, it seems we do still need one more rally to a minor new high before the reversal lower.