Cautious start – Later dollar to rally
|On Friday, we finally saw the Dollar lows. Long live the Dollar. Well, obviously we shall see pullbacks on the way down and in any case, we are really only in the early stages of the gains. Both EURUSD and GBPUSD provided some decent losses. On the open we’re more likely to see a limited pullback before losses continue. I also suspect that USDJPY and USDCHF may see minor pullbacks and then for a stronger rally once again – and most likely USDJPY may well see quite a decent rally. As long as it does, then we could see a move higher in EURJPY. However, it’s a rather tricky development and I remain rather cautious in this pair.
As for the Aussie, it all depends on the first reaction. Ideally, I’d like to see a pullback to the 0.7090-95 area and from there we can expect gains to the 0.7163-75 area. Any break below 0.7090 would likely see deeper losses.
Therefore, look for the initial pullbacks soon after open but later we should be focusing on the Dollar upside.
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