Clearly Friday’s nonfarm payrolls release was basically a case of a rabbit caught in headlights. No one really wants to do very much until the announcement is made. Did it surprise? Mildly…
Whenever considering a structure, there can be stronger or weaker projections that can be absorbed. In this case it pushed the U.S. equities to the extreme, but in forex but to a lesser extent. The post release development was not what I had wanted, but was within the boundaries of the extremes. This means that we have been left in a situation where we need the dollar to confirm its intentions. There are some modest signs that we should see the dollar resume its rally, although there has been no confirmation.
Technically, we have less than clean momentum reversal indications and 4-hour Price Equilibrium Clouds that are capping the dollar. This tends to point to a quiet start to the trading week. If we are to see the dollar resume its uptrend then we need Asia to settle for neutrality, and preferably for Europe – or part of the European session – also to allow the Price Equilibrium Clouds to move sideways.
There is one potential indication that we shall see this outcome, and that is suggested in EUR/JPY. I have been relatively neutral on this pair, aware of the limited upside in EUR/USD while USD/JPY failed really to make much of a dent on the upside. From the cross, we have seen a recycling that suggests further losses. In my mind, this points to EUR/USD opting for the downside.
If there is any detractor from the group of pairs I follow, then its in AUD/USD that failed to reverse lower significantly and ended the day moving higher and on bullish momentum.
Therefore, it looks like a cautious start to the week, but by the end I feel we’ll have forgotten all about Friday’s monthly distraction.