Early Dollar Pullback Lower And Later Reversal
Having written the headline, there are some variances. For the most part, the headline should be correct. I have EUR/USD, GBP/USD and AUD/USD expecting a pullback higher from the start. USD/JPY should see a push higher along with USD/CHF. However, while USD/JPY appears to be more bullish, USDCHF seems to require a minor new high and then a pullback lower.
However, as the day develops the pullback lower in the Dollar, we should come to a point when we should see the resumption of the Dollar upside. Most likely the best template is to follow EUR/USD due to the fact it will be forming a Wave b/iii. How deep? Modest – maybe mildly firm – but there is a limit. At the same time, we should see USD/CHF pulling back lower before it can see a higher move. This should also see GBP/USD seeing a 5-wave rally and followed later by a reversal back to the downside. This will likely be the same in AUD/USD.
EU/RJPY should see a pullback higher having seen a 5-wave decline and that should see both EUR/USD and – to a lesser degree USD/JPY – providing a peak and later reversal…