Tuesday, January 10, 2012

Calmer trading for today

The Dollar’s rally stalled just a bit short of expectations yesterday. It was rather a weird day to be honest with a number of conflicts in terms of rather shaky projection ratios and how the Dollar highs seen yesterday fit into the larger picture. I think the correlation side of things has probably settled but at the expense of ratios that didn’t really appear correct. I still have a few doubts but I’m going with the majority view in terms of correlation since this seems to have a stronger argument in terms of the overall picture.

On that assumption we should see a repeat of yesterday I think. That is, further Dollar losses within a correction which should continue through today at least and depending on the speed and complexity could even stretch through to tomorrow. This certainly seems to fit within the Europeans and Aussie but I’m slightly less certain about USDJPY. I sense even USDJPY could spend a quiet day also, which would be not much of a surprise given its ultra-slow moves these days. More, I tend to point to EURJPY. This too made a low at a less than satisfactory projection but seems to now require a pullback higher before the downtrend can resume. Thus, with a firm EURUSD it will aid the cross and if anything we could see a firmer USDJPY. However, it will be one to watch carefully.

Thus, today looks like providing subdued trading but with a more Dollar bearish bias and potential for some whippy price action. Best focus on identifying the Dollar supports and potential for taking advantage of the next rally…

Good luck
Ian Copsey


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