Seriously… look at the Europeans and even the Aussie… slippy-slidey, slowly, slimy and soporifically sleepy. However, having said that, the market is doing its job - and frankly the general expectations are being fulfilled. There’s still more to come and in general EUR/USD and USD/CHF have developed in channels and look like being maintained. What has surprised is how GBP/USD has led the decline but is driving into the apex of a mini-bearish wedge. So I’m expecting some deviations between the Europeans over the course of the day. This does seem necessary because the dollar index has reached the target area I suggested on Tuesday and needs to move back lower. The index has a little wriggle room on the topside.
The Aussie performed like a cobber on fire, catching the high perfectly for the expected decline. This is still in the early stages of a larger move and this is best used for temporary trades only. Once we have seen more development we should find ourselves in a stronger move but that appears to have more potential next week.
Meanwhile, USD/JPY extended its rally - which was not a surprise given that hourly and 4-hour momentum were both pointing higher. It’s becoming a bit mixed now and more care is required but does seem to have potential for a sideways move before higher. The only caveat I have is that because the structure from the 114.87 high has been rather complicated that I am concerned about some surprise breaks. Just take care in this pair. This is also a factor in EUR/JPY – the king of the complex corrections – that dipped a bit lower than expected before pushing higher still. I’m beginning to feel that the cross could maintain a messy sideways range.
Best vehicles are the three Europeans (EUR/USD and GBP/USD more clear compared to USD/CHF) and the Aussie…