As expected, we didn’t get too much movement in either direction. The market isn’t quite ready to give up the dollar downside at this point. What we need to judge is whether this is merely a sideways consolidation before the dollar extends its losses, or just a normal pause while the market plays pass the parcel until someone else makes the decision when to open the wrapping.
Normally that implies a whole day of nothing followed by a 30 minutes of sheer unadulterated panic and fear, but then we can all go back to bed again. However, I do feel there is room for a little more than “nothing” in the lead up to this catalytic event, but still without compromising the market’s reluctance to commit to a breakout. Indeed, this still has a fair range of mobility within which the market can feel safe. It may be a little different between each European currency so it would not be too surprising to see an element of de-linking between these three. However, don’t expect any huge moves until the parcel is unwrapped.
There is one pair that could make a new extreme over the day and that’s the AUD/USD. Yesterday went well, perhaps stalling a little higher than I would have liked, but it does look like making a new high today. This does still look very much on target as described yesterday.
Both JPY pairs benefited yesterday. They still haven’t triggered any magical trip wire that will confirm follow-through yet so there’s still some wiggle room here. I prefer the upside in both but even I won’t commit until I see a little more progress. More likely these two will suffer the same fate as the Europeans and leave it to the Hankie opening ceremony.