David Fuller's view USD/JPY became overextended during a persistent decline towards the psychological ¥80 level, where the historic 1995 low also occurred. The recent break above ¥82 and somewhat bigger rally than we have seen in recent months indicates a change of momentum. A drop beneath ¥80 would now be required to offset current scope for some additional mean reversion towards at least the declining 200-day moving average.

The US Dollar Index (DXY) fell sharply from its June high as the USD temporarily became the carry trade currency of choice once again. However, DXY has rebounded from just above lateral trading near 75 which was also the region of the November 2009 low. There are now two higher lows since the March 2008 trough, indicating that DXY, for which the EUR is just over 57% of the weighting, remains rangebound but with a slight upward bias. A close beneath 75.60 would now be required to offset scope for sideways to somewhat higher ranging.

Thailand (weekly & daily) is the latest of Asia's rally leaders to lose upside momentum, in this instance near psychological resistance from the 1000 region, following a persistent advance. It is susceptible to some additional mean reversion towards the medium-term trend represented by the rising 200-day moving average.

Hong Kong (weekly & daily) has fallen back following a surge to the psychological 25,000 level. It is now likely to see some additional reaction and consolidation of recent gains before extensive underlying trading supports renewed strength towards the 2007 peak.

The UK's FTSE 100 (weekly & daily) has encountered resistance in the region of the April high and today's downward dynamic also confirms a failed upside break from the late-October consolidation. Some further reaction and consolidation towards the rising MA appears likely before renewed strength is seen.

Gold has also lost its short-term uptrend consistency (weekly & daily), in line with most other markets which experienced upside momentum moves over the last three months. The weekly chart above shows a series of similar overextensions since 2006. Each was followed by mean reversion towards the medium-term trend mean represented by the rising MA. We should not be surprised if sideways to lower ranging towards the MA occurs in this current instance as well.

See also Eoin's two important chart reviews last Friday.