That was a frustrating week… Everything seemed to be pointing to dollar gains but the euro was on steroids. However, I’ve discovered the reason. There is some initial risk of gains but it’ll need a pullback pretty early on. The impact on the other majors was to see USD/CHF and USD/JPY collapse and GBP/USD deepen its pullback higher towards the extreme. USD/CHF has probably seen its low – but take care. GBP/USD has barely much upside…
Once this part has settled down I suspect some difficult development as the different pairs suggest an unbalanced outlook. Therefore, it wouldn’t surprise me to see complex corrections develop in in the GBP/USD and USD/CHF but USD/JPY appears not to have that option. It should really be more directional – but with initial barriers on the upside.
Again, the rush higher in EUR/USD clearly saw deeper gains in EUR/JPY also. I’d like to think that it has found a high but there is the balance between, what should be, a stronger USD/JPY versus a weaker EUR/USD. How the balance develops is something I cannot judge. This is a development that could be a little tricky.
It seems AUD/USD followed the example of EUR/USD and decided to follow it higher. What it has developed is a Wave -i-. No doubt, this should see a pullback lower in Wave -ii-. If so, we could see some pretty static development over the week – but let’s see. There are other options.