Forex Returns To Range Trading

Well, it seems to be a bit like that. NFP days always promise all the joys of a roller coaster ride and Friday certainly provided the outcome. Out of all it was AUD/USD that performed with dignity and developed exactly according to plan. For the rest there were surprises although EUR/USD did follow the basic template I suggested although not exactly to the expected levels.

However, within all that bedlam there does appear to be a basic theme, although each currency pair does still has its own agenda to satisfy before all return to a common outcome. This seems to suggest a rather volatile day today and probably across the board to varying degrees. Initially the immediate outcome should be Dollar bearish but it shouldn’t be too long before we start seeing some rather erratic behaviour in the Europeans. It may be worth sitting out during the volatility and looking for the final stages that do seem to have relatively tight target ranges.

The Aussie is expected to correct higher having reached the downside target provided on Friday. The bigger problem here is determining how deep this recovery will be. There’s no set depth so close attention is going to be required.

USD/JPY… oh… I had been saying for the past two weeks that 103.01 would be the maximum high but had felt the 102.77 high was likely to be the final corrective high. Friday whipped that 102.77 level and reached 103.01… Ouch… but that has provided the final peak and thus should extend losses again. However, these initially look limited to therefore leave EUR/JPY in a rather more delicate position that will probably imply range trading for a few days more. Thus, ignore the cross and prefer using USDJPY as a vehicle.

Overall the day looks more like seeing a return to ragged trading. Best take care and note the extremes of the expected ranges.