Dollar Upside Has Resumed

It was a better day yesterday, particularly for the EUR/USD that made its final high smack in the middle of the higher retracement range, and shot lower. Such sharp movements are not particularly helpful, as they hide the true structure and it requires using as low as a 1 minute chart to make sense of the moves.

Good old Big Ben rattled the table with his cries of success of the monetary easing. I can’t help but liken it to a serial gambler who’s lost some money and is determined to double his bets until he gets his money back.

Oops, I have wandered from my non-fundamental approach! However, it was clear that his utterances would provide a catalyst and they did so perfectly. While there is early risk of consolidation, there does seem to be a consensus for quite a solid follow-through later today. This does seem to have confirmed my original, and more aggressive, bearish view for the GBP/USD and what appears to be an even stronger rally in the USD/CHF. Indeed, the Swissie may well be a better vehicle on which to hitch a ride.

The Aussie has also extended losses nicely but has a slightly mixed structure in the process. I suggest observing the original target, but judging by the momentum it seems likely to extend even further. A trailing stop seems appropriate for this guy.

And finally, the JPY pairs. As I suspected, with the way things were developing we saw both rally to new highs and then a rather balanced position. I still find these two flying into the face of maximum projection zones and as mentioned yesterday, the huge consolidation seen over the past month (and a bit) does raise the risk of skewing the final stages of this rally. There are no strong reversal indications at this point, and there does seem to be risk of further gains but I’d suggest taking a cautious stance and awareness of any faltering in this rally.