Monday, June 27, 2011

I feel the Dollar needs to start pushing higher… but not so sure whether it will be direct…

I can’t say Friday has much of a theme. If anything, perhaps it was a slightly softer Dollar but hardly uniform or convincing. Overall I still have the view that the Dollar appears more likely to see gains in spite of USDJPY dipping lower. I have been more definite in this respect in GBPUSD and that hasn’t changed but there are signs that the losses in USDCHF are becoming a bit stretched, indeed even presenting us with a bullish divergence. What does bug me more than the others is EURUSD which has a rather perplexing structure in which the recent moves appear difficult to slot into the larger picture.

This forced me to spend some time looking over EURUSD this morning and frankly it is very indecisive… I am able to accept losses in the medium term picture but if these losses develop directly it does seem to complicate matters as it would appear to imply quite solid losses. I’m not really keen on this right now. My long term view is still for significant losses in USDJPY, USDCHF and GBPUSD. However, it’s hard for me to accept significant losses in EURUSD right at this moment. Later maybe, but right now, if I am correct on the Dollar elsewhere then the Euro downside should be moderately limited.

So for today I am continuing to take a more cautious approach, looking for more information in EURUSD in particular. There is still potential for USDCHF to make a last dip, although it’s not a certainty, and this could be extended to GBPUSD. However, both appear more aligned to seeing the Dollar making gains.

Equally, USDCAD seems still to be looking for another high and AUDUSD probably on the softer side. Thus, these seem to confirm US$ gains. EURJPY… I have no real expectations as it remains locked in a rather complex and ragged period of range trading and something needs to give in either USDJPY or EURUSD to shift the cross more convincingly.

Have a profitable week
Ian Copsey

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