Thursday, March 3, 2011

The ratcheting Dollar losses look set to continue

The Dollar pullback yesterday was relatively brief and by the second half of the day it resumed the downtrend, this time correlated across the four majors. This decline still has further to go and I’ll be looking for extension later today. Having said that the move has become rather more of a ratcheting move and this certainly looks like continuing for some while to come and into next week.

I mentioned yesterday that we should be coming to a point where a deeper correction should be seen. I’ll cross that bridge when we come to it but the interesting part of this entire move is how these corrections develop as we are in slightly different sections of the wave structure through the currency pairs. Given this complexity I feel there is a strong risk of one or two pairs seeing some rather complex corrective patterns that will cause confusion over the coming 2-3 weeks…

Indeed, the ratcheting decline looks set to continue today but the immediate targets are not that far away. If you are maintaining longer term positions be prepared to be patient. If I see any of the currency pairs displaying a more direct path then it may well be USDCHF – but not quite yet. I think we need to get to the bottom of the next dip, see the correction and then I feel there’s a chance it could catch up slightly with the Euro.

The general outlook is echoed in AUDUSD and USDCAD. In particular the Aussie seems to have quite a tough barrier at 1.0250-80 and which may cause a sharper than expected correction lower in a recycling… watch for that possibility over the coming few days as we approach the target resistance. USDCAD is the same…

Finally, EURJPY maintains it’s obfuscation with the deep pullback higher. It could just fit into a bullish extension but at this point I feel the moves in the majors is still more correlated which tends to argue for range trading. I feel until there is some stronger break of the broad 112.00-114.00 range we’ll have to play a cautious waiting game…

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

Good luck
Ian Copsey


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