There seems to be a risk that we could see Dollar losses directly – but take care around the lows

Yesterday was mostly successful, the Dollar lows identified quite well in three of the four majors (excluding GBPUSD) and the high in AUDUSD. The only thing that has me wondering is the sharp recovery from initial lows and the rush to marginal new ones… Several different scenarios can be generated from this and interestingly one of them is direct losses to the major weekly targets. This latter scenario which was not high on my list of preferences yesterday has come about through the strength of GBPUSD and also AUDUSD.

However, if we do see direct follow-through it would limit the EURUSD target to the 1.5146 area while 0.9932 USDCHF is implied and probably a retest of the 1.7041 high in GBPUSD.

It’s food for thought and can’t be ignored but nor should the Dollar bullish side as well. I think I probably favor the downside now, but there are clear breaks to prove this wrong and we have to remember that the market has been quite erratic over the past week and thus it wouldn’t take too much for another sharp reaction.

USDJPY developed as expected yesterday and I’d like to think that for now the larger downside threat may have abated. However, always keep your eye over your shoulder for a drop below 88.46-63 which could begin to tip the weight too far in favor of the downside – and when this breaks it should be quite strong I feel. My preference here is for a choppy recovery but I can’t see any strong signs of excessive strength just yet.

That is all reflected in the JPY crosses also which are going nowhere very fast… The consolidation has become so much of a mess it is really difficult to judge what the next move will be and I feel we’ll have to be very careful here. I’d prefer just to let them rest for now and wait for more definitive signs from the majors first.

AUDUSD still look bullish and has support between 0.9284 & 0.9307. The target appears to be around 0.9499. USDCAD is also a currency that is busy going nowhere and much like the JPY crosses we need some catalyst to break it from the corrective price action we have been seeing.

Today’s free analysis is for AUDUSD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s trade set ups (+85 pips) and the new review of the support & resistance levels issued in the daily report.

Good luck
Ian Copsey

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