EUR/JPY Developing In Relatively Tight Range

Friday was “one of those days” for the straight dollar-currency pairs, although in the EUR/JPY and AUD/USD there were two oases of good calls. Do the gains seen in the dollar imply any stronger follow-through? I doubt it. There could be an element of strength over the first half of the day, but I’m not expecting a rabid clamour for Dollars. More, the problem faced on Friday was the hangover from Wednesday’s rapid rally in EUR/USD, a factor that can always place an invisible cloak to identifying the underlying waves. The other was a misjudgement in the GBP/USD earlier in the bullish sequence. Otherwise the USD/CHF saw a fairly modest reaction.

First we have to navigate the completion of Friday’s move, and then plan the next one. However, overall I’m not really expecting a momentous move today. There are signs from the two good calls from Friday that the moves today are going to be limited. For example, the EUR/JPY has been developing in a relatively tight range and that looks like extending. The first reaction in the day should be higher, but then risk dipping back into the range.

Equally, the AUD/USD had a positive day, as expected, and could start today in the same way. But, I can’t see this taking off into the stratosphere. More likely it could drift back lower over the day.

As for USD/JPY, there are two options, both initially bullish, but one more bullish than the other. It’s not yet time for this pair to be so terribly strong although I do feel this will be the eventual outcome. For today I feel the risk is for further consolidation.

Thus, the start to the week doesn’t look particularly exciting. More it’s a day for jobbing and snatching a few points here and there. By later in the day we could see more movement, but I think it will be from tomorrow that we begin to see a stronger directional move.