By the time I laid my head upon a nice soft pillow, I had seen the expanded flat in EUR/USD dissipate to trigger the alternative outcome I had suggested. By the time I raised my old bones at 3am it looked like the market had gone crazy. However, that said, the development has been appropriate in terms of the needed structure and therefore we are looking at Plan C. There’s a bit more than that because the general correlation has taken a hit in one or two pairs.
I have no idea what caused the dollar to drop like a stone – and I don’t really care, because it’s the structure along with ratios that actually provides targets. So I’m pretty comfortable with the overnight dramatics (that’s Asian overnight). What it does tend to suggest is the likelihood of continued swings for the coming week or so. Most likely we’ll see USD/CHF and GBP/USD generate more directional moves compared to EUR/USD but that’s not a bad thing.
The lack of correlation may well be highlighted by USD/JPY that slipped below 115.06 and which seems to promise further losses that could drag EUR/JPY down by a decent margin although much depends on any possible consolidation.
As for the Aussie, the rapid rally was just not expected but actually hasn’t really broken any structure. It seems to be an extreme move but still valid.
So overall, I suspect some decent moves through to the end of the week but which could still be quite volatile.