Friday was pretty dull. Yesterday was even more dull, and today looks like being as dull as the past two days put together. Just looking at the Europeans there is a clear divergence of development. The EUR/USD keeps edging higher in a very messy and erratic manner. The USD/CHF has made the same attempt on the downside, but has been far more efficient at not getting anywhere. The GBP/USD mapped the development in the EUR/USD in terms of structure but has made very little upside impact compared to the EUR/USD. This divergence of performance together with the sheer lack of dollar losses in the GBP/USD and USD/CHF is producing divergent expectations. With the messy development it points squarely at a corrective structure.
So what correction is being seen? Well, the GBP/USD and USD/CHF are the most aligned and both tend to point to limited ranges on both sides of the market. The EUR/USD on the other hand appears to have a more defined structure that may see the dollar lose out but it hasn’t yet been confirmed. These three, therefore, should be approached with kid gloves as here are still several options that can develop.
The AUD/USD has also made steady but not spectacular gains and preference is for this to continue. The risk is that some of today could be taken up with a sideways consolidation but it does still look like moving higher.
The JPY pairs performed relatively well yesterday and in the EUR/JPY moved to new intermediate highs. At this point they could diverge slightly with a correction that looks due in the USD/JPY while a firmer EUR/JPY could maintain the upward pressure, but I can’t see this in a runaway situation. Therefore, there is a good chance these could lapse into tight ranges/ consolidations, except perhaps the EUR/JPY, as long as the EUR/USD pushes higher.
Limited opportunities today: Any trades should be limited in duration unless a larger break develops. Until then take care and take note of support & reistance.
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