Still No Resolution To The Greek Drama

Another relatively dull trading day. Perhaps the market was hoping for a catalyst from the FOMC. Clearly it provoked an initial sharp reaction in the Dollar but in the U.S. indices the reaction was muted. So, EUR/USD is still in a range, poised and ready to be herded in one direction or the other. At 1.1533 it had seen two ABC moves. This could be a terminal correction but there’s still risk of a third ABC. Thus, the Greek drama has been strung out and we’re still awaiting a key break.

I note that USD/CHF rallied as expected, just a few points above my target but close enough to suggest this lower degree leg is complete. There should only be one more… Given the basic correlation we have seen between USD/CHF and EUR/USD, perhaps it will be USD/CHF that provides the signal to suggest a more substantial move… Equally, the marginal new high in GBP/USD wasn’t really expected but I’m not sure it’s going too far at present. It is in a position where it can take several decisions and understanding the break levels will provide greater clarity to the next move.

I have been frustrated with AUD/USD, my preference bearish, but the upside limit to any retracement has been exceeded to suggest further gains. It therefore suggests we could se a more positive day today.

I have been waiting for USD/JPY to make its move. Rather like EUR/USD (although on a different scale) USD/JPY had seen a recovery in two ABC moves and therefore there was a fine balance between an additional ABC or reversal lower. Yesterday’s losses appear to have spurned the chance of deeper correction. The downside therefore beckons and my target the same as I have been suggesting. Where this puts EUR/JPY is difficult to judge. There may be potential for a triangle but they can prove to be dangerous to predict. However, it is just one option. Given the expected bearishness in USD/JPY, the direction in EUR/USD will either maintain a sideways consolidation in the cross – or potentially losses…