The Europeans broadly behaved as expected although not exactly as planned. However, I was always rather wary of what would develop as the recent structural development has been extremely challenging. Actually, I remain that way. There are conflicts and within these conflicts there are major battles being fought evidenced by some extremely wild and complicated moves. I even sense the potential for this to extend for some while unless some larger catalyst cuts through the confusion and dictates the next move.
I am stuck with upside targets in GBP/USD but also the need to see a deeper correction lower. This wouldn’t rule out a correction higher although it could potentially be a better outcome, just to clear out the clutter we have seen over the past 2-3 days. USD/CHF appears to have limited upside else break of key resistance could point to even more extensive range trading. EUR/USD has developed rather like its been forced to follow European dictates from the headless bureaucrats in Brussels. It doesn’t seem to know what it’s meant to do.
Basically this means be very cautious in the Europeans.
The Aussie continued losses as I had expected although not in the manner I had hoped for. However, that seems to be clarifying its intentions although this could also generate some consolidation for a while. The eventual outcome remains firm but it’s this intermediate stage that also needs care rather like the Europeans.
If anyone’s into swingers then the JPY pairs are in fashion. As long as EUR/JPY keeps extending its gains then the targets I suggested remain intact. However, the alternative outlook I offered yesterday was even stronger than expected, walking on the fine line between bullish and bearish. Thus, yesterday’s low remains a key support. If there is any other alternative then it’s a complicated sideways consolidation – but this would be the final leg. Therefore, quite how USDJPY develops is going to be important. I was disappointed with loss of the key support yesterday and even more disappointed that it didn’t reach back to the 101.38 low… So now it needs to make up its mind and make a statement. Once made it should clarify the follow-through.