Monday, March 21, 2011

The Dollar has taken a more direct route…

The more indirect route I had expected in EURUSD in particular failed to materialize with the break above 1.3144 signaling further gains. Part of the reason I had opted for a more complex route was down to USDCHF which I have felt is due for additional losses. The way things have developed may well provide us with a much more confusing end to this move… Having said that it does seem to provide a little more sense to GBPUSD which probably will not see a high above 1.6343 now…

Just covering EURUSD first, as far as I can see we only have one more high to go before a larger correction. This should mean the first part of the day – and this could be through to NY trading – will see a pullback. Thus, the final high may come late today but we should allow for this to extend into tomorrow. I suspect that GBPUSD will map a similar route. What we will need in general is for correlation between these two and their European chum to break down. USDCHF, as far as I can see still needs a deeper correction higher…

Now, of even greater complexity is USDJPY… The pullback from the 86.31 low has taken me by surprise. Of course has rubbed off on EURJPY which has moved close to the 115.98 high. While frankly USDJPY can really be taken as a separate entity when talking about the Dollar in general, the overall wave structure raises a great deal of uncertainty. In terms of the larger cycles I still feel there are losses to come but given the G7 intervention last week it does seem difficult to be bearish right now unless a nuclear reactor blows its top – which is highly unlikely. The situation here in Tokyo is actually nowhere close to the negativity which has been fueled by the press.

The moves we have witnessed in both USDJPY and the cross are still rather difficult to interpret due to the relatively limited pullbacks and straight line rallies. Overall I am pretty open to either side but on the assumption that we will see a decline in the Euro over the coming week it would seem to edge USDJPY to the upside. However, the basic message is still “take care” as the outlook is not one of any great clarity…

Today’s free analysis is for USDCAD and can be found on

Have a profitable week.
Ian Copsey


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