Market Developing In Slow Motion

I mentioned on Monday in the weekly video outlook that, particularly in the EUR/USD, the market looks like it is developing in slow motion and so it has come to pass. The end of the week should be no different. The EUR/USD has developed almost perfectly so I have much higher confidence in the outlook. The USD/CHF has developed broadly in line with expectations but has been a little more choppy than expected when I had thought there was a chance of shallower corrections. On the other hand, the other currency pair I had tipped for a decent move was GBP/USD. This one has performed a little more strongly than I had thought. However, all three are developing well, quite in line with the structures that should be seen. There are still some dollar losses to come but then another correction due.

The Aussie saw losses into the downside target zone, but I’m not convinced that it has been in the right structure. From this point I think we should be aware of a move back higher but whether it’ll be a deep correction or see deeper gains is something of which to be aware. The other problem is that there doesn’t seem to be much downside room so there is risk of some potential choppy behaviour.

On to the JPY pairs and the bigger story was the break above 138.24 and the approach to the daily swing high at 139.21. This stronger showing does appear pretty bullish. I’m not a great dollar bull in the USD/JPY at this moment although the upside does still have some room left to test. Thus, I feel we could have a two-way day today. In the cross there does still seem some leeway on the upside still but it looks more that it will require both the EUR/USD and USD/JPY to contribute their share of the burden. Equally, with both the EUR/USD and USD/JPY having limited upside at this point the same will be true of the correction in the cross that should be relatively deep.

Maintain the same approach as we go into the weekend – take advantage of the dips until dollar bearish targets have been met