Friday produced a slightly muddled outcome, particularly in USD/JPY and AUD/USD, but was followed by their expected declines. With that new high in USD/JPY it tends to suggest a more cautious approach. Indeed, while EUR/USD saw a solid reversal lower it doesn’t have that much more to go on in this current wave. Equally, AUD/USD looks to have the same template and this tends to suggest a general two-way market albeit with a slight dollar bullish bias.
Momentum-wise, we have a general dollar bullish outlook but in several currency pairs I see a common theme of price not really being able to break away from the 4-hour Price Equilibrium Clouds. This tends to back up the two-way market for a while. It shouldn’t last for too long so be patient while the weekend hangovers have cleared. The Swissie is included in the above but currently has a less frantic outlook compared to the EUR and GBP moves where there is greater risk of more emotional reactions.
While commenting on GBP/USD, I stated on Friday that if the 1.3472 high broke that we may see an overlap (one with a deeper Wave b/iii) but it came to a shuddering halt after another 7 points. This has great implications that will reverberate for a while to come with some pretty serious swings. For now, I am expecting it to follow along with its soon to be porcee, accompanied by the common fractious relationship, and it doesn’t look like a pretty picture.
Finally, EUR/JPY benefited from the additional high in USD/JPY and I think we need to be mindful of the potential for another new high although I find it touch and go whether the cross can also make a new high. EUR/USD tends to argue not… but take care with this pair today.