Thursday, July 16, 2009

While I expect extension of yesterday's moves these should be less aggressive

The Dollar weakness against the Europeans did not come as a surprise. Its strength against the Yen did…

The analysis took longer than usual this morning as I took a long hard look at what is going on. Starting with the Europeans I have suggested that this Dollar weakness may extend through to the end of August. I am now slightly doubtful of this. I do think the Dollar will weaken further but we’re going to have to see how this develops. If it becomes a strong trending move then I’d even put a target of 1.5750 EURUSD on it…

However, I took a step back this morning and looked at what this implied in the daily chart and while the 1.5750 level is implied and will broadly continue to be so, I feel that a direct move is not necessarily a done deal. Even yesterday USDCHF didn’t power through that strongly and I thought GBPUSD showed quite a bit of restraint too. It therefore strikes me that we’re actually still in a daily sideways consolidation.

We should be able to confirm this over the next day or two. If EURUSD stalls at 1.4265 and corrects while USDCHF fails to move below 1.0590 and GBPUSD stalls around 1.6573, then the risk will most definitely be a retest of the old 1.4338 high in EURUSD, possibly a dip to 1.0488-1.0527 USDCHF and the 1.6743 high again in GBPUSD. Then we could see the entire correction recycle back from where we have just been

Today should provide an important contribution to this picture…

Now, the break in USDJPY above 93.93 did come as a complete surprise. This currency pair has been failing in the normal degrees of wave relationships which is frustrating the process at the moment. It could be just a brief pullback but considering what is happening elsewhere I feel we need to be cautious here. The JPY crosses all seem to require further gains and thus we’ll have to see how much USDJPY can drive this versus the Europeans. However, overall I do feel there is a little more upside due in this today.

AUDUSD has a limit at 0.8056-80 and a pullback is due while USDCAD is a tough nut to crack when the pullbacks are so shallow. I feel it must see a deeper correction at some point, but overall the downside does still seem attractive.

Today’s free analysis is for USDCAD and can be found on along with yesterday’s trade set ups (290 pips).

Good luck.
Ian Copsey

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