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I was really quite satisfied with yesterday’s moves, mostly much as expected although GBP/USD saw losses resume more directly. I can see the mild “blip” within the decline that caused that error but this just mean that we should see losses to the next target.
If you take this template for the Europeans and Aussie, then that’s what I feel we’re going to see – pullback, follow-through and pullback. This is probably quite useful as we move into the long U.S. weekend that may well trigger a consolidation or just corrective behaviour on Monday. So, the moves we see today should provide a reversal by the end of the day.
However, it looks more like USD/JPY has likely found its current high for now and given the long winding snake like rally, the risk appears to be for a decent pullback. Combine this with a less directional EUR/USD, it tends to suggest that EUR/JPY has probably found its high. Therefore, be prepared for losses but I don’t see this as being a rapid decline but first the development of foundation waves that will provide the platform for losses.
I suspect it will also cause periods of consolidation but by mid next week I suspect it could press deeper.
AUD/USD was steady but not remarkable. It did its job and could see a minor new low today but then followed by a pullback – so pretty much copying the European template.
So, today should be a less directional day and end up in a correction…