Breaks Are Closer – But Maybe Not Today

I’m quite bemused. For months... and months... we have been fed with comments about how the Greek debt issue will damage the EU. Yesterday, the Greek Central Bank warns of the country taking a “painful course” and the euro rallies. Maybe something else happened to boost the euro – I don’t really pay any attention to it. However, at this point, it has remained within the recent range, and until that has been broken, the status quo remains.

Having said that, the range appears to be narrowing. USD/CHF slipped below 0.9232 and suggests further losses, but there is room for the decline to remain above 0.9071. It could hold. There’s even a risk of a break of 0.9071, but even if it does, I can’t see excessive losses. Equally, this suggests the upside in the euro is either non-existent or limited…

All the while the market has been trying to scrape a living off the Continentals, GBP/USD has maintained its rally. This was expected, but at each stage of the rally, my projection targets have been exceeded. This excessive rally, while good for the bullish positions, is stretching the limits, and I note that momentum is not really obliging with strong bearish divergences. Yes, there will be corrections but at trend is pretty firm…

AUD/USD took a look over its shoulder at EUR/USD and decided to follow, but like the euro, it remains within a range and until that is broken, there is still some risk of the underlying direction resuming – but needs confirmation. Until then, we’re still going to need to exercise care.

And just as I thought I had nailed USD/JPY, it all went belly up. This could still see a minor new corrective low before the rally resumes. However, the decline in USD/JPY hasn’t really dented the upside in EUR/JPY. Indeed, it has made solid gains, and I feel it can make a little more. However, at some point – and I think the rally will begin to slow – we will be due a correction. When that happens, we’ll have to observe which of EUR or JPY will provide the driving force…

Still care needed. However, GBP/USD probably has less upside left in it for now.