A Quiet Run Into The Weekend

It was good to see a quieter day yesterday. Despite the unexpected moves since the end of last week, there has been one pair that has provided some guidance – USD/CHF – being a daily retracement that has quite a tight area that should provide support. Having said that, these retracements do have a range in which they can stall so we do still need to be on our guard.

Less clear is EUR/USD but yesterday’s drift lower reduces the options and GBP/USD doesn’t look as if it has completed the rally. This combination of finalising the completion of the correction should soon bring a confluence of options that will – hopefully – help us to recognise the conclusion of these dollar losses. While, following last week’s whip lower in the dollar, I had considered a longer lasting complex correction, there is an argument for a direct resumption of dollar gains. We’ll have to confirm this when the time comes, but for now we have work to resolve these final legs that should occur over the next few days. Also keep in mind that by next week the liquidity will be declining more sharply and that tends to revert to tight ranges and frustration.

For today, the risk appears to be dollar bullish but may well keep to a relatively tight range. In particular GBP/USD suggests consolidation and USD/CHF and EUR/USD also suggest limited dollar gains. Therefore, it does look like a quiet run into the weekend.

On the other hand, USD/JPY seems to suggest that it’s losing control of a structure and this appears to generate a higher level of risk and potential for a complex correction. I can’t even rule out a resumption of gains. That EUR/JPY has seen a deeper correction and does seem to suggest a new high may well be driven by USD/JPY but we’ll have to judge this as it develops…

Mostly a quiet end to the week, best look for the JPY currencies but even then could be quite slow.