As expected, yesterday was a slow day with very limited development. We are on the cusp of seeing the dollar reverse back to the downside although USD/JPY appears to have jumped the gun – and perhaps USD/CHF also. We just need EUR/USD to see a final new low for the reversal. From Friday, GBP/USD I left it on the expectation for a new high. Over the weekend I realized there was a mini-minor Wave v. So we have seen a final rally. At this point, it is correcting higher. So once EUR/USD has completed its decline we’ll be back on the dollar downside.
Now, having seen some decent dollar gains, the problem we shall have is that through the pairs there is a range of development on the dollar downside. USD/JPY has already started, as I mentioned, but has a relatively limited downside while USD/CHF has potentially a deeper Wave a/iii as does EUR/USD. In GBP/USD, well it has a limited pullback compared to the others. Therefore, if we average this out, the pullback’s high lower in the dollar appears to suggest a relatively limited correction.
AUD/USD is still in sleep mode. It has limited upside but the potential for losses. However, we have a bullish move in EUR/USD once it has formed its low while USD/JPY looks like it is resting.