I’m not quite sure about yesterday’s moves. Nothing really went awry but we didn’t see the dollar make gains universally. I suspect this will continue over the first half of today. For example, GBP/USD appears to be locked in a sideways range – and potentially AUD/USD also. EUR/USD appeared to be frozen as if caught in the headlights of an on coming truck while USD/CHF made some steady gains but then gave them back. It’s almost as if the market is a little disjointed.
Having said that, I do feel we shall see a directional break before long and most likely (as normal) either in European or U.S trading hours – or maybe both. I still think this is more biased to the dollar upside but we’ll have to see how long the current status quo can hold.
Even the Aussie has some kinks in it – and enough to suggest the potential for a sideways consolidation. This isn’t the outcome I expected but there are a few options here and this should keep it in the recent range for the entire day. Play the ranges here.
As for USD/JPY, it has made steady gains and while I expect these to continue there is also the risk of some initial consolidation. This tends to dovetail with EUR/JPY that took advantage of its Japanese big brother to make a decent recovery. However, with the expectation that EUR/USD will decline, we shall need to watch the balance between the three pairs. While there can still be upside room for the cross there will be a point where the cross fades and begins to point lower…
I find the relationship within the range of currency pairs quite flexible to a degree but a clearer directional bias is likely to develop either by the end of today or on Monday…