Indeed, Friday was a little tricky. I had hoped for dollar gains, while knowing there was room for a pullback and in the worst scenario, a return to a much weaker dollar. The market appears to have probed this potential, perhaps to avoid actually making a more decisive statement of intent. However, across the pairs there was one pair that probably made it clear that the next move had to be dollar bullish – and that was GBP/USD. I could perhaps also add USD/CHF that bucked the dollar bearish trend and even made a new high by 5 points.
Thus, we should begin the week with a dollar bullish day that should go on to eventually meet the target areas I set last week.
This may help out with AUD/USD that, as I described on Friday, gave me a strange surprise that I hadn’t expected due to the structure – the rally to 0.7736 was one point from a potential target I had identified. Friday’s neutral sideways move failed to generate any decisive break, but as long as it follows the expected dollar strength would tend to suit my preference. However, there remain some questions that have been left unanswered, and therefore the air of uncertainty remains.
In the JPY pairs I suffered a set back, but nothing too serious, and I identified my error in the structure, a factor of a mildly larger expansion-retracement that I normally see in USD/JPY. This helped EUR/JPY to extend losses, but it failed to reach the 122.53 low. This should trigger gains in the cross that implies that USD/JPY will outpace EUR/USD…
The market is still in a lull period, so best retain a short-term outlook.