I have an overall outlook for the dollar in general. However, recently the individual pairs have been rather lacking in correlation that makes life a little difficult. In particular, USD/CHF has been rather a lone wolf but so has GBP/USD. I sense that today – and maybe tomorrow - is going to see this continue. As far as I can see, both EUR/USD and GBP/USD have topped out for now – and strangely enough USDCHF also. So we’re going to have to be on our guard over the next day or so but as the week progresses I suspect we’ll begin to see the general correlation kick in. So today suggests a continuation of this ragged development.
The Europeans aside, I was a bit surprised with the losses in USD/JPY. Having said that, I had been expecting these losses but not quite so soon. It is at a stage where I can see potential triangles and/or losses but there are other alternatives. We have some modest hourly & 4-hour bullish divergences but without much “oomph” to them. The start of the day will provide us with a clue and from there we should be able to identify the direction.
Equally, in EUR/JPY we have seen some deep losses, as I had expected, to Friday’s 132.19 target and just below at 132.14. There are modest signs of a bullish divergence. As I suspect EUR/USD shall decline, we’ll have to consider the potential for losses in the cross. Having had a look at the rather difficult development it still tends to suggest the Wave [iv] target I had mentioned some while back…
The Aussie did well on Friday. It should follow-through higher today but initially quite limited, a pullback and then a new high. Bearish divergences are developing so don’t look for an excessive rally.
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