Friday’s sharp move higher in the Dollar finally came to a halt to then develop a correction. I’m expecting to see a deeper pullback. However, there’s a limit. Forgetting USD/JPY for the moment, EUR/USD and USD/CHF saw the Dollar rally in a 5-wave move. In GBP/USD, the decline was also a 5-wave move but compared to the other two Europeans, GBP/USD had completed a Wave a/iii. While we can’t say that these three will see their corrections develop in the same proportion, it does suggest that we’re not going to see an extreme pullback.
Coming back to USD/JPY, we’re going to have to watch the move. There’s room on the downside and even the potential for further gains. However, if I have my own way then I’d guess that we’ll see a correction lower before the next push higher develops.
In EUR/JPY, I could see the potential for the EUR/USD/USD/CHF vs GBP/USD to form a corrective development. So far we have seen a completed zigzag followed by a Wave -x-, a Wave -a- and this morning’s dip in a Wave -b-. Therefore we’ll be due a Wave -c- but we haven’t enough information to generate any targets. However, once that has been seen, it will be interesting to note the final zigzag in a triple three. This would tend to suggest that it may find a rough cap for Dollar gains to resume.
The Aussie? Swings – bearish ones… but relatively limited.