For most of the day on Friday, it was a case of “when time stood still.” That’s hardly a surprise because it’s the normal approach to the Non Farm Payrolls. I have no idea what the result was but price obeyed my command… I suggested USD/CHF would provide the key to the extent of the strength of the dollar’s weakness – and it stalled 5 points below the higher target area. While it didn’t trigger a significant move in USD/CHF, EU/RUSD provided a 4-hour Key Reversal Bar – and actually the same in USD/CHF - but of course, a bullish 4-hour Key Reversal Bar. In addition, the fact that GBP/USD preceded that move by breaking below key support also gave us a big clue…
As we start the week, the 4-hour Price Equilibrium Clouds in both EUR/USD and USD/CHF are capping the dollar while GBP/USD has made the same test but with a minor breach but without fully breaking the 4-hour Price Equilibrium Cloud low. This does suggest that the Asian session could well need to see a deeper correction following the dollar gains seen following the NFP.
So far, there has been no clear reversal signal to the losses we’ve seen in the dollar – and more, the initial targets have also not been approached – so there’s still a mild stalemate in terms of breach of key levels on both sides of the market. The week should therefore begin on a cautious note.
AUD/USD probably saw firmer losses against the dollar, has broken below the 4-hour Price Equilibrium Cloud and with momentum hardly suggesting any significant strength – but has approached the normal target. Thus, overall, with the Europeans and Aussie tend to be on track.
The JPY pairs made further downside progress. USD/JPY managed to remain below the 118.23 corrective high and extend losses as expected, dragging EUR/JPY with it but without much enthusiasm. It hasn’t yet broken below 115.97-116.16 and this will be needed if there is to be further losses. It has definitely helped EUR/JPY to extend losses but without any strong impetus. I think it should continue but it could be a complicated development…
I think we’ll begin to see further directional moves before too long…