Tuesday, April 26, 2011

Is it time for the Dollar losses to resume..?

It was a bit of this and a bit of that yesterday. There are quite good signs that GBPUSD and AUDUSD completed their corrections yesterday. EURUSD is still sitting in the middle of its range and USDCHF dipped to marginal new lows and is left in mid air right now.

First of all, I can’t see GBPUSD and AUDUSD rallying without the Europeans joining in. While I’m not totally comfortable with the limited pullback in USDCHF I’d not fight any new lows. Therefore, the weight of argument does appear to be in favor of Dollar losses resuming today. The (also) relatively shallow pullback in GBPUSD does concern slightly as it implies a stronger extension higher than I had originally anticipated but within bounds of normal ratios. This is basically in line with the general expectations for the Dollar across the board anyway so does not look out of place in a relative manner.

If there is any alternative then it’ll be down to a recycling in USDCHF higher and to allow EURUSD to achieve a deeper pullback. However, it does leave GBPUSD and AUDUSD a little vulnerable in that case…

Even the limited rally in USDJPY and the continued weak momentum appears to support the view for Dollar losses in general. As mentioned yesterday, I’m not 100% comfortable with this in terms of structure as it doesn’t appear consistent with the larger daily implications. Given the fact that I feel the Dollar should recover after this final leg lower it does seem to smack of consolidation overall in USDJPY…

Certainly, from the look of EURJPY which looks to still be within a sideways consolidation it does appear as if the moves in the individual pairs will be generally correlated to a strong extent…

Thus, watch for breaks to confirm my suspicions today…

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

Good luck
Ian Copsey


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