EUR/JPY: Treading Between Bullish And Bearish
Having written yesterday’s outlook on Sunday the open was quite a shocker. Not that the levels really ruined the outlook in the Europeans. Certainly GBP/USD pushed higher than I had expected. but actually well within the limits of stronger projection targets. This event also helped AUD/USD higher, although from a slightly higher retracement but this tells us something about the next move and tends to work in with the Europeans also. So while yesterday’s action may appear emotive, in fact it has worked well within structural limitations.So what does that mean for today? Well, I can’t see the dollar running away on the upside, and more likely we’re going to see it weaken over the day. In particular, having mentioned AUD/USD earlier than I normally do, I feel this pair has a good chance of making a new high. All in all, while a bit complicated at this stage of the structure, I feel this is all blending in quite well in terms of correlation and expectations…However, I suspect today – or at least much of it – is going to be fairly dull.The JPY pairs… My preferred outlook in USD/JPY broke down which forced me to review. I was never keen on excessive losses and the 98.43 support I offered held well. If we had seen much lower than yesterday’s low the alternative I saw was just too bearish and something that would complicate the entire balance in the dollar. However, after having taken a longer look at the rally from 96.81 I can see the error I made and this look a lot better, and in keeping with the expectations I had. I won’t rule out minor new lows. From the perspective of momentum it would make things look a bit tidier.What we do need to watch is the EUR/JPY. It remains treading a fine line between bullish and bearish, and therefore we should be paying attention to the relative movement of both the USD/JPY and the EUR/USD. Combining this with the movement in the cross may and should give us information about the expectations of relative performance between the two intrinsic pairs.