It was a more settled day and overall successful across all currency pairs, except perhaps with the USD/JPY. But, I had a rather “just observe approach” there. Overall it was obviously encouraging after the previous day’s debacle, but while I caught the high in the euro, a few points from the low in USD/CHF, and caught the deeper corrections in the GBP/USD and AUD/USD. Even the EUR/JPY went mostly according to plan. I wish I could take today off and take a rest!
Anyway, while almost everything went well it has landed me with a puzzle. The dollar lows in the EUR/USD and the USD/CHF were supposed to be (potential) final lows. The declines in GBP/USD and AUD/USD were supposed to be corrections and ones that would imply a new high. I suppose these four could develop independently just as they did yesterday, but if the former two continue according to “plan” then these two groups will have to see zero correlation. It’s not impossible but one heck of a difficult task… Therefore it does seem as if something has to “give” somewhere and considering momentum right now I’d say it’s EUR/USD and USD/CHF… There are just no strong reversal indications…
Indeed, that may well be the case when I look at the USD/JPY and the EUR/JPY. The cross still looks buoyant even after making such super progress higher yesterday, and still has higher to go. The USD/JPY has not signalled any bearish reversal as yet so the initial drive can be made by USD/JPY, but we have to watch to see what the EUR/USD does today. It may just take both the EUR/USD and USD/JPY to fuel the rally in the cross. However, do keep track of where the break levels are.
The ambiguity over the dollar that was triggered by one man and his handkerchief down in the Wall Street Deli remains, but I think perhaps we’ll see additional clues today.