Tuesday, June 8, 2010

It looks like the final Dollar push higher risks being choppy

Yesterday wasn’t exactly what I’d expected, but not too far off. I still view the current Dollar strength as mapping out the last stages of this part of the bullish structure. I will be expecting further gains further down the road and if I’m to hazard an estimate then it could be sometime in August or maybe September if the anticipated intervening correction develops slowly.

This means for now we’re looking at buying Dollars on dips. The biggest uncertainty for this time is whether the market found a penultimate peak yesterday or whether we’ll see modest follow-through today before a second pullback ahead of the rally’s finale. I’m tempted to say we will see further highs today on the back of USDCHF and possibly GBPUSD although such an extension in EURUSD would be a bit too deep for the eventual 1.1712 target I have. However, we have to also consider the deeper EURUSD target around the 1.1640 weekly swing low.

Thus, for today we’re going to have to see what develops and act accordingly.

We should also keep an eye out for EURJPY. I suspect the more suitable development here would be sideways range trading. It has a minimum target at 104.59 and also one at 103.19. If USDJPY drops more sharply then there’s an even deeper target at 100.50… However, to reach these will require a consolidation to develop today. Today therefore has potential to be quite a tight range trading day or we’ll see movements between USDJPY and EURJPY more-or-less correlated with some built in lags that would allow the extremes of the range trading to be achieved.

AUDUSD looks as if it can eventually break below 0.8065 but as mentioned yesterday I don’t see any excessive losses at this stage while the greater risk after seeing those lows would be a return to the 0.8548 level at the same time as the Europeans move through their corrections after this Dollar rally is complete.

Equally, USDCAD seems to be pointing to the same outcome with 1.0730-75 appearing to be a strong contender to a peak on this part of the move.

Today’s free analysis is for USDCAD and can be found on along with yesterday’s Trader Package Review & Trade Set up report. (+145 pips)

Good luck
Ian Copsey

FX-forecaster Trader Package now available at €20.00 pm
For MT4 users

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