Aussie Succumbs To Further Losses

In general, apart from the JPY pairs, we saw development very close to expectations and, with the exception of a very deep correction (at one point) in the GBP/USD, seeing targets within a few points of expectations. These have generated mixed signals from momentum across time frames but quite interesting developments in the Price Equilibrium Clouds. From the combination of dollar losses from last Wednesday we have seen the 4-hour and daily Clouds begin to converge and provide what looks to be the risk of short-term consolidation. This suggests a rather cautious start to the week, perhaps today and tomorrow, but with this development the next break will provide a more definitive resolution that should generate some directional moves again. This tends to apply to the Europeans in general.

The Aussie topped out in the expected retracement area and succumbed to further losses. Here we don’t really have the constraints of the Price Equilibrium Clouds which are all actually quite in harmony with each other. There may be room for some short-term consolidation but the Clouds are sending quite strong indications.

Yet, it was the USD/JPY and EUR/JPY that spoiled the week, the deeper losses than I had expected forcing some adjustments, in the EUR/JPY back to an original outlook that I had begun to feel had become less certain. From a combination of the EUR/USD and USD/JPY I don’t see much initial movement in USD/JPY and I’d suggest sitting out for the moment while the next stage of the EUR/JPY and EUR/USD play through. Once these two have completed what should be a critical development the potential for greater sparks to begin flying should begin.

The early stages of the day, from Asian into Europe, could generate some mild extension of Friday’s moves but overall I expect some corrections into North American trading that could extend into tomorrow.