I can’t say Friday was too much of a surprise. The best mover was USD/JPY that basically followed my comment on Friday, in immediately moving lower in its range. For the rest, the range trading we saw was basically as expected. As we start a new month there appears to be continued apathy within the Europeans. I sense this will probably maintain a similar pattern of trading but probably erring on the US Dollar downside. It will be only a break of the past 4-day’s range in EUR/USD that would generate the next directional move. USD/CHF remains a jumpy, nervous pair, and one that is currently boasting a juicy 4-hour bearish divergence. Still, that divergence needs to be confirmed but does seem to offer potential for losses.
GBP/USD recovered and then submitted to a new corrective low. However, that said, it remains in the range of the past month and it doesn’t look likely to push either boundary today. Thus, on the basis of having toyed with the downside, the implication does appear bullish today.
AUD/USD also spent the day busily going nowhere or perhaps in both directions, but with no specific intentions. Pre-retail broker trading has seen both sides of the range approached and I don’t think we’re going to see this pattern continue. It has been, for the past 6 months, only interested in one direction and there are no strong signs of that reversing. The only problem is identifying whether we’ve seen its currently corrective high. I doubt it but I wouldn’t expect a strong break on the upside…
As mentioned, USD/JPY saw losses, still within the larger range of the past month. On Friday I pointed out that the risk for this to continue – and therefore further consolidation within the current wide range between 115.50 - 121.84. That implied ore risk on the downside and already this has seen a dip down to 116.68 in pre-retail broker trading. That we are now towards the bottom end of the range suggests we should be wary of significant losses from here. That should keep EUR/JPY in a range also…