I was quite happy about yesterday’s moves. USD/CHF remains the key in terms of limits and we haven’t yet reached that point. This still warns of potential whippy development, particularly when we have to endure the Fed playing its monthly prank and forcing further self-flagellation. I sense the potential for a significant move out of this release…
So, yesterday saw further dollar weakness, something that has forced me to re-evaluate the Dollar Index. It puzzled me for a while, and adjusting daily counts are always fraught with risk of misjudgement due to the lack of information from the 5-minute and hourly movements that can be hidden from view within a daily bar. I have had my basic long-term outlook for the dollar for around 4-5 years now and the structures I have seen in my workings yesterday do seem to still fit with the final outcome. I am therefore pretty comfortable with the larger grand cycle but it’s now a matter of what happens today.
On yesterday’s development, USD/JPY reached the stronger projection target within 3 pips – and this suggests some decent swings – but with EUR/USD reaching towards the targets I have, the impact on EUR/JPY was for a deeper recovery. This balance between the three pairs makes this a tough day to judge – which perhaps is pretty much as would be expected on NFP day…
In general, we are seeing momentum beginning to slow but that’s hardly a surprise before NFP but even then we shall probably face the gauntlet early in the European afternoon.