Friday, January 27, 2012

Further Dollar losses to come today

Dollar losses extended yesterday, a little more directly than I had anticipated but to the sort of areas expected – in EURUSD to the very point. The additional developments have solidified the structure a bit more and barring any consolidation the greater risk is for the week to sign off having seen new lows. However, this should generate a mildly longer lasting correction before the next leg lower but that should come next week.

The early part of the day in Asian trading should see consolidation and a mild extension of the current correction. Possibly this could extend slightly into Europe but I can’t see it lasting through to N.A. open and thus look for the Dollar to resume losses by early in the European day.

USDJPY saw the expected decline and has stalled within 3 points of my target. This is now critical support and the fine line between bullish and bearish. That EURJPY is also hovering around retracement support may not really have too much impact on USDJPY given that EURUSD is expected to rally. However, I feel we should see a recovery but which may well be subdued. I’d like to think that it could make new highs above 78.28 but given the recent aversion to trading USDJPY I’ll remain more prudent. Let’s just say that if USDJPY manages to break above 78.28 I think the argument for having seen a major multi-year low at 75.57 rises significantly.

That’s about it… In summary, selling into this Dollar correction should set us on course for a decline into the end of the day…

Have a great weekend
Ian Copsey

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