Tuesday saw a day of relatively violent consolidation in a number of the major's, but for now notable levels hold on EUR/USD in particular and as such have prevented a larger correction of the recent up-trend(s). Given the historically extreme levels reached on a number of oscillators such as %age above/below the 55 day ema and signs of a peak in EUR/USD implied volatility (IV) suggest some further consolidation looks possible, but it appears a pause within the underlying uptrend rather than anything more serious....for now.

This does not mean one should be complacent, I am merely suggesting that there appears to be no immediate risk of a reversal but traders should be fully aware that chasing this move increases one risk with each passing day. One other thing to watch with regard to sentiment towards EUR is that the Eurozone-Periphery/-Core spread basket is now moving below its 55 day ema, following a break of the uptrend from the early-April lows a few weeks ago - this should continue to be supportive towards EUR as it reflects the markets belief that widening spreads between the likes of Greece, Portugal, Ireland against German 10-year rates is now becoming less likely. Bear in mind however, the widening seen in August and September didn’t negatively impact EUR as it had earlier in the year, so perhaps this correlation holds less weight presently. Regardless, when spreads are tightening it’s difficult to see it as anything but a positive – even if only a marginal one.

So what looks interesting today? I still favor the crosses versus pure dollar based pairs as noted for the last few days. Clients who took the 'Trade Idea' for longs in EUR/CHF were able to book modset profits last night at the revised stop-loss. I continue to likeAUD/USD to the long-side but will admit that move higher from the Wave 4 lows is not terribly impulsive, so I am cautiously bullish.

I will also continue to monitor EUR/CHF for another long entry as I feel that this one still have much further to go on the upside.

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