Tuesday, July 5, 2011

I think we’re on the verge of Dollar gains but I can’t see these as excessive…

Hmmm… well… Friday & yesterday were mixed bags really… The Euro topped out on Friday but then blipped back higher yesterday while USDCHF extended gains on Friday and GBPUSD made a more sturdy recovery than I had anticipated… It’s all a bit of a mess really but individually there does still seem to be some logic to the structures…

So what’s to happen? As the headlines outlines I still feel there’s Dollar strength to come. However, the depth to which both EURUSD and GBPUSD have extended limits the larger downside. I do feel both are going to top out today and see losses and once again it should be GBPUSD that acts as the front runner. Indeed, that should find new lows over the coming 4-7 days. However, I don’t see the same impact in EURUSD. Here I feel we’ll see continued range trading but more towards the low of the range.

That should leave USDCHF with limited upside for the coming days most likely followed by a return to more subdued and grudging losses over time. So out of the Europeans it still looks like GBPUSD providing the stronger potential for stronger moves.

USDJPY… Oh boy… It makes you wonder whether it’s worth saying much at all as it subsides into one of those long, slow drifts through nowhere. I can’t see it doing much else until we see larger breaks. This should then leave EURJPY with limited upside and as EURUSD reverses lower the cross should be dragged down behind.

AUDUSD actually looks quite bullish. Having said that it seems to require a pullback lower before it can extend gains so slots in well with the expectations against the Europeans. USDCAD is still on its long and winding road lower…

Have a profitable week
Ian Copsey

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