Earlier last week I was uncertain of the structure in the dollar rally and provided a warning of a possible direct follow-through. Friday’s follow-through appears to imply that we’ve seen a shallow correction. At the same time, we’re seeing hourly dollar bearish divergences and to a degree, 4-hour dollar bullish divergences. This tends to provide a rather mixed outlook that is going to need some due care and attention.
Now, this raises some puzzles, particularly in GBP/USD and AUD/USD, that seem to require further gains, particularly in AUD/USD, but there’s a minor risk that GBP/USD could also push higher, but I’m not that confident.
So overall, we’re going to have to sit pretty and wait for the next break, whether bullish or bearish. That should keep EUR/JPY seeing limited follow-through, a pullback and then another follow-through but then a reversal in a pullback so it’s not looking as if it will runaway in the first half of the day at least.
Thus, we have a rather ambiguous start to the week but will need to remain patient to note the next directional move.