USD: Dallying With A Possible Consolidation Again

The dollar downside targets in the Continental Europeans were hit nicely. These were tentative targets within yet another possible consolidation and from what I can see of the development, it does suggest the high risk of that a sideways move seems to be in the cards. It would be beneficial to ensure that the reversal back higher is confirmed and if so, then we have a relatively simple task of knowing where the rough boundaries of the consolidation will lay. Thus, the extension of the market’s lack of commitment to either side is likely to continue.

Perhaps a supporting factor to the above is the lack of interest in GBP/USD. It wobbled one way and then the other but in terms of it also joining in with the Continentals in a sideways move, well, I can’t see it happening now. Perhaps, given its recent preference for the downside, that could well be the outcome today which suggests a move to the targets I mentioned at the end of last week. Watch out for that…

The Aussie broke the resistance I had thought would send it higher, but then reversed to a new corrective low. Not only is it just a bit annoying, but also leaves us with an inconclusive outcome. This still has potential on both sides of the market but hopefully today's activity will clarify the structure, or even force a breakout. Just be patient until the break is made.

USD/JPY puzzled. EUR/JPY made a new high. The cross, in particular, appears to have a bias to the upside which could provide a clue for USD/JPY. It also has both hourly and 4-hour Price Equilibrium Clouds supporting price with momentum not really demonstrating any significant bearish intent. With the risk of EUR/USD returning into consolidation, it appears to imply that USD/JPY must provide the bullish fuel. Thus, it’s going to take a break to a new high to send USD/JPY higher and potentially support the apparent promise of a stronger cross. Until that break higher occurs, be a bit more cautious.