I can’t say I’m too surprised with Friday’s development. The ECB shock may still limit the market’s appetite to push the boundaries and this appears to be confirmed by the 4-hour Price Equilibrium Clouds that are currently capping the dollar. I won’t say that the market won’t attempt to push the dollar higher but I suspect that any attempt could see the dollar edge higher, but I just can’t see that happening today. There’s also the rhetoric surrounding Brexit and the general (and warranted) nervousness over the equity markets. This tends to suggest a relatively limited ranging day for today in the Europeans at least.
Having said that, GBP/USD has seen further gains won bullish momentum in both hourly & 4-hour charts. It does have some limited upside factors but, nevertheless, still cautiously bullish – and supported by positive hourly & 4-hour momentum. I’d still suggest we don’t push too hard with some limiting factors not too far higher. This tends to match the Continental Europeans in terms of the underlying nervousness in the market in general.
Meanwhile, the Aussie pushed higher as I had hoped for and still has further upside risk it seems – although 4-hour momentum is beginning to slow and could develop a 4-hour bearish divergence. I’m not sure it’s going to last for a long time so still retain some caution.
Over in the Land of the Rising Sun, USD/JPY made some decent gains to pull EUR/JPY behind it. I’m not sure these gains are sustainable at this point so do take care and note momentum. I also note that in the cross the 4-hour Price Equilibrium Cloud is rising so even if we see losses they should be shallow on the day. We shall have to keep an eye on the relative movement in both EUR/USD and USD/JPY in order to recognise the next directional move…
The market appears to have been a little bemused over the past few days and therefore we need to take things step by step…