Wednesday, May 18, 2011

Further Dollar losses against the Europeans expected today

Yesterday proved quite interesting as it began to provide a little more information about the types of movement being seen across the board. There was even a potential surprise package amongst them all in USDJPY. I’ll remain cautious for now as the same structure has two possible outcomes, one being a stronger rally and the other a correction. However, both indicate further gains and it will be just where the next rally stalls that may provide greater insight. Given that even EURJPY has mimicked this ambiguous (though still bullish) structure we shall have two areas to observe to provide the clue as to the degree of strength seen.

Otherwise the Europeans appear to have subsided into slow motion, or so it appears. It could still hold a potential trap but the break levels appear to be fairly well defined so we can work with the outlook of Dollar losses until proven incorrect. However, the position within which each currency pair finds itself is different it seems so some due care & attention is required. Certainly a degree of independence across the three will be beneficial as each has its own structure to navigate. At this point I feel EURUSD has the greater upside potential in a recycling higher. GBPUSD on the other hand appears to be within a choppy upward correction. USDCHF is having to carefully tiptoe delicately around the limited downside which may well cause some choppy upward correction and yet another decline that should limit the break below the previous low.

The point to note here is that the Europeans are still within a corrective phase before further Dollar gains can be made. Therefore, at this point I don’t think we’re seeing the larger Dollar bear trend resume. That still seems to require another poke higher still.

On a side note, it is interesting to see the U.S. Equity Indices breaking down in line with expectations. They still have a little further to go though will be due a mild pullback before too long. However, once they have found their respective targets the basic uptrend should resume. Ideally the high in the Dollar should occur quite close to the timing of the low in the Indices.

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

Good luck
Ian Copsey


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