Conflicts In The Forex Market

A mixed day. I can’t say I caught any price pair with the exactness for which I strive though some developed broadly with the sentiment, in particular USD/JPY, EUR/JPY and AUD/USD… The swissie didn’t go particularly wrong, nor GBP/USD but EUR/USD broke above 1.2637 which I didn’t appreciate…

So broadly, I’m left watching key levels and trying to find the balance between several conflicting indications. One I haven’t mentioned is the 80.96 low in the Dollar Index. A couple of weeks ago I had called for 81.00-10 that represented a correction within a structure that would imply a reversal higher. In that respect it is similar to USD/CHF. I do feel a break of the 80.96 low would raise the risk of a significant follow-through in the dollar. Yesterday’s expected strength in USD/JPY obviously provided an element of assistance in the process also.

Thus, the Dollar Index and USD/CHF lows do appear to provide a barometer of whether the dollar rally extends or it collapses. GBP/USD is close to resistance levels that would suggest a recycling lower… or if the resistance breaks then a stronger follow through higher.

EUR/JPY currently has strong bullish momentum that is making a stronger statement in favor of a higher EUR/USD that is close to key resistance levels. Alternatively perhaps USD/JPY could provide the required strength as the high we saw yesterday was really quite crucial. Any break would begin to suggest a much stronger thrust higher. After all the end of this month is the Japanese financial half-year end but the break would seem to point to an irreversible thrust to new highs. At this point I’m not banking on it but would not fight the break.

AUD/USD made a new low of one point and then reversed in a flash. Yes, it has further to go but in the larger picture I don’t think we’ve completed the decline from the 1.0613 high… (although it has managed the barest minimum of projections.) Thus, I do feel that at some point we’ll see another dip lower…

And of course, today is nonfarm payrolls. I saw it mentioned somewhere so can’t ignore it now. Probably though it’s a flip of the coin followed by a mad scramble as the coin drops to the floor with 2 million hands trying to grab it first… Basically, that should sum up the day. Don’t expect too much until U.S. open but then expect fireworks. However, I’m not convinced it will send the dollar into a trend at this point… yet…