Although the beginning of trading yesterday wasn’t quite what I had expected from the open, the eventual outcome was as expected. There were a few touch and go moments – particularly the depth of the losses in USD/JPY that hit an extreme which I had not expected. The line in the sand was pretty much the limit beyond which it would turn lower again. That said, we have had no confirmation that it has the energy to pick itself up off the floor.
So, even with the alternative start to the week, the eventual outcome hasn’t really changed much. We still have some choppy moves to come – not excessive by the look of things, but nevertheless today doesn’t look like a strong trending day. There may be risk of consolidations developing to extend the time we see within a range. This relates particularly to the Europeans.
As I had expected, EUR/JPY found its high at 125.00 and saw a steady bearish day. In the larger picture I don’t think this is a final low but a temporary one. However, it will require USD/JPY to begin to stabilize and muster up some courage to break back higher – initially above 113.25… If it breaks any lower then we’re seeing a much deeper decline than I had anticipated.
The Aussie also saw a mild follow-through from Friday’s low but then a recovery. This should see a low below yesterday’s low but then a recovery. This tends to suggest that the Antipodean is very much in line with the Europeans.
Mostly a steady start to the day and we’ll have to see how long the choppy development lasts.