My feelings mislead me, the force is not strong this week.
I am expecting the markets to start pulling back, so logic dictates that the USD will gain strength as the fear trade comes back.
At the same time, the wave count on some pairs like USDCAD indicates another stab at lower levels.
Unless this whole dollar correlation trade gives up, one or the other has to take place.
Tail wagging the dog?
Or...the tail is actually stationary and its the dog that is wagging back and forth in space... As Yoda would say: Expect nothing--just observe and react..let the Force guide you, don't guide the Force.
I hear what you are saying about the Dollar correlation and all and the fear trades that should begin to emerge in the markets..and I actually agree that fear will take over again soon....but I don't think the currency markets will reverse this time around and give the USD a ton of strength. I know that is how it usually goes--but something is tapping me in the back of the head saying "uhh....not this time.."...
As confused and weird as everything has been acting for the past year--I just don't know if conventional thinking will continue to work in expectations.. Take a look for example at how NEWS releases used to really drive and spike the markets a few years ago--big news days sent the currency markets into huge swings and whipsaws...and in the past couple of years that has dwindled down a ton to where the spikes and moves are no longer as volatile or hugely influential as they once were.. I look at NFP fridays now and it seems hardly a fart in the wind sometimes based pretty much that the news report isn't seeming to reflect the general feeling or facts around it that may be in contradiction. Maybe its just me but I've been seeing a change happen in the currency markets the past few years I can't put a finger on--and I'm not sure what it is a sign of... That "xfactor" for surprise moves is not as huge or ground shattering as it once was...or perhaps I'm just so used to it I don't see it anymore..I dunno.... Do you notice anything?
I think this pair will do a sideways pattern and be rangebound for a while as we get to the holidays...it seems to be almost tired. It has to break the 1.08/1.09 mark now on the Daily to break the downtrend its been on and I dont' see where its going to do that yet with any long term change forecast... Guess we'll see what happens...