Dollar In Balanced Position: Neither Confirming Losses or Break

I had hoped for a far more interesting day on Friday. If you like whippy price behaviour then you will have found it interesting. It has left the dollar in a rather balanced position neither confirming further dollar losses nor a break of resistance, so we are left hanging and waiting for a stronger signal to provide us with a better sense of expectation. There are 4-hour dollar bullish divergences but hourly momentum, following Friday’s push-me-pull-me efforts, has been left with less than convincing indications. Today could well be an important day that could decide the next larger move.

Even the AUD/USD has been left with a puzzle. Last Thursday’s bearish key reversal day does push the balance to the downside, but critical support hasn’t yet been breached and key reversal days don’t always work. There are occasions when they merely represent a consolidation. Hence, even this pair has the same question market hanging over its head and we’ll have to play a waiting game to be certain of the final outcome.

And “blimey crikey” even USD/JPY has decided to join with the Europeans in plumping for a neutral outlook. The initial gains I had expected developed, just a tad higher than I thought but I’m not convinced they were constructive. Could we see a new corrective low? Possibly… but there isn’t much room on the downside before it begins to look a bit soggy and bedraggled.

The same can be said of EUR/JPY. There is little cushion on the downside before it turns bearish. This cross has a history of quirky behaviour, much as any cross due to the mixture of pure EUR/JPY plays and the impact of the intrinsic pairs that have their own dynamics. It’s not one I tend to like getting too intense about, and that’s particularly true at this time when the USD/JPY has been broadly correlating with the Europeans so that it tends to feign its desire to move in one direction only to see it fail.

I think you can see from the description above that today is probably a day to wait, and watch to observe the early moves and hopefully provide us with the market’s intention. However, I do feel this week will be pivotal.