USD/JPY To See Firmer Gains Today

Being in a correction and in an ultra-slow, cautious and disinterested market, it’s really tough to generate thought provoking outlooks. It’s like watching paint dry; the market being as dull as ditch water; watching grass grow; waiting for a politician to utter common sense…

Yesterday, the market made the most of what was a relatively shallow correction by playing a game of “who can make the correction last the longest…” I’d really love to say that once this correction is complete we should see a trend develop… but no, the reversal when it comes, will almost certainly make a pig’s ear of a supposed trend; but it’s more likely to be the tail of the pig that is coiled and stubby.

That really is what I think is going to happen today. EUR/USD andGBP/USD have developed well, the Swissie dipped deeper than expected and USD/JPY did the same. Having said that, there is a need for EUR/JPY to edge higher. The cross annoyed yesterday because I thought we could see a more direct rally – but no – it had to form a minor new corrective low from where I still feel we’ll move to a new high in this correction. This begs the question of the balance between EUR/USD and USD/JPY and which will drive the cross higher. With EUR/USD not really expected to shoot higher, it would appear that USD/JPY will – or should – see some firmer gains today.

Otherwise today could be similar to yesterday but I feel the Europeans need to establish a stalling point for a reversal. Even then, following the reversal we shall need a new foundation wave for the follow-through. Thus, there is a strong risk of a relatively tight range as we go into the weekend…

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