Fed’s Daly says 50-point rate cut in September may not be warranted - WSJ
The conflict that I faced yesterday appears to be resolved. The dollar made uniform losses against the Europeans and pretty much in line with the expectations for that scenario. This morning’s sharp (but still limited) correction is a bit of a concern but my reasoning is more down to USD/CHF that has stretched the downside far enough (and too close to the 0.9381 low) to make the prospect of any further high above 0.9514 much less likely. There is an alternative that should not be forgotten but I feel it much less likely at this point.
Thus, the task today is in identifying the limit to any correction and what constitutes a resumption of dollar losses. I don’t want to get too carried away today as even if we break below yesterday’s dollar lows there are some close support areas that can still spring a surprise.
I also need to consider GBP/USD although there seems to be a modest difference between GBP/USD and the Continental Europeans in that the former looks like making a new low before it can recover. This still remains a thorn in the side that I find difficult to resolve in terms of perfect correlation with the Continentals but should be kept in mind unless the critical resistance in GBP/USD is broken.
Elsewhere, the aussie has strengthened and given the drop we saw was inconsistent with the larger target I had envisaged it certainly seems to have a much more positive outlook. Still, it has its intermediate targets so like the Europeans there is still risk of corrections but overall the upside is looking a lot more healthy.
USD/JPY suffered a day of lethargy that initially subdued EUR/JPY also. That has set up a rather cumbersome leg higher but still very much in line with the structure I set out yesterday and as described in the weekly video. Overall this looks positive and should have the benefit of both bullish EUR/USD and USD/JPY. For the latter I mentioned the shallower projection area as most likely and I still have this view. I could accept the next higher but the stronger projection seems very unlikely I feel.
So today should have a similar look and feel to yesterday but just take care of the intermediate corrections that could keep us on our toes…
Thus, the task today is in identifying the limit to any correction and what constitutes a resumption of dollar losses. I don’t want to get too carried away today as even if we break below yesterday’s dollar lows there are some close support areas that can still spring a surprise.
I also need to consider GBP/USD although there seems to be a modest difference between GBP/USD and the Continental Europeans in that the former looks like making a new low before it can recover. This still remains a thorn in the side that I find difficult to resolve in terms of perfect correlation with the Continentals but should be kept in mind unless the critical resistance in GBP/USD is broken.
Elsewhere, the aussie has strengthened and given the drop we saw was inconsistent with the larger target I had envisaged it certainly seems to have a much more positive outlook. Still, it has its intermediate targets so like the Europeans there is still risk of corrections but overall the upside is looking a lot more healthy.
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USD/JPY suffered a day of lethargy that initially subdued EUR/JPY also. That has set up a rather cumbersome leg higher but still very much in line with the structure I set out yesterday and as described in the weekly video. Overall this looks positive and should have the benefit of both bullish EUR/USD and USD/JPY. For the latter I mentioned the shallower projection area as most likely and I still have this view. I could accept the next higher but the stronger projection seems very unlikely I feel.
So today should have a similar look and feel to yesterday but just take care of the intermediate corrections that could keep us on our toes…
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