Trading in the main USD pairs has been extremely choppy over the past few days. An aggressive move higher in the dollar post payrolls has been clawed back at the start of the new week leaving the Greenback in a much more uncertain position. From a medium-term cyclical perspective the next day or so looks extremely important for the FXCM US Dollar Index (equally weighted basket of USD versus EUR, JPY, GBP & AUD) as the timing seems right for a reversal or at least an attempt at one. The 11,865 level looks to be an obvious pivot as traction below would trigger a minor topping pattern on the daily chart. USD/CAD has already broken its equivalent level this morning – leading? On the other hand, continued strength in the index after tomorrow above 12,000 would invalidate the potential negative cyclicality at work and re-focus higher.
USD/JPY stop raised to 123.75 (Closing basis)
