The Dollar rally has not been a particularly strong one yet but so far the structure has been very encouraging and once this initial uncertainty has cleared we should see a stronger rally emerge. I do have a feeling though that there is still some short term risk of consolidation. I say this due to the position in the JPY crosses. They were probably the hardest to analyze this morning but the message I had from each of them was that we’re due a pullback lower followed by new corrective highs in the new downtrend. Of all, AUDJPY is the clearest with a peak expected up at 83.40-50 and this should be matched with the target in AUDUSD. This cross in particular should then begin losing ground and should be down more to AUDUSD. Now, given I’m still bullish for USDJPY that means AUDUSD must drop faster than USDJPY can rally following the test of 83.40-50. EURJPY and GBPJPY are similarly bearish once they have completed their pullback higher and the losses should move to new lows. Again, the only risk we have to look for is potential shorter term consolidation. Having said that, considering I’m quite bullish for USDJPY we should then begin to see EURUSD and GBPUSD begin to accelerate lower and then it’ll be a balance between the USDJPY strength and other currency losses again. Thus, for today we just need to contain extreme Dollar bullishness for now and spot the opportunities. I do think we’ll see the Dollar attempt to move higher again today but probably in the same controlled manner as yesterday. Perhaps USDJPY is more likely to produce a clearer move… However, still remember the underlying message is Dollar bullish and will only change if last week’s lows are broken.

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