Friday, February 3, 2012

Dollar losses need to emerge now or extend the sideways consolidation

That was disappointing yesterday. The market couldn’t manage to scrape enough bearishness to press the Dollar lower. Instead, the pullback I had anticipated following a minor new low appears to have developed already. If that’s the case then we should see the final push lower today. However, from levels I see right now the higher target for EURUSD just doesn’t seem like a reasonable possibility. The same can be said of USDCHF and probably GBPUSD also. If there is any alternative then it’s going to be continued consolidation last through today, potentially into Monday before the last dip. However, if we do see direct losses today, it is beginning to look as if the Euro will not reach my higher targets and actually end like a damp squid.

All this does still fit into the underlying structure I’m looking at for a pullback after this coming dip, not a particularly deep one, but followed by another round of losses that should last through into March.  

USDJPY has moved back into retrograde. We are seeing the anticipated weakness and I still think this will develop over the coming days but we do just have to be aware of continued consolidation but still remain below the 76.35-42 highs. This would still be a bit restrained so don’t get too bullish at this point. The main direction does still seem to be lower – and we just have to be patient.

Directional momentum in EURJPY has slowed also. I can’t see room for excessive moves today but tend to favor another push higher before the downside develops. This does fit in with both EURUSD and USDJPY outlooks.

So, today should probably be a fairly docile one, I suspect a Dollar bearish one as it does need to develop at some point but it doesn’t look like it’ll be a dramatic event…

Have a great weekend
Ian Copsey

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