Technical Focus: USD-pairs (EURUSD, NZDUSD, USDJPY), Gold/Silver & More
The US Dollar Index (DXY) is holding up fairly well after breaking out above the 2015 highs, with a couple of different pattern sequences potentially developing. The bearish scenario we looked at looks the least probable at this time, but if important support doesn’t hold then sellers could step in and send the dollar lower.
EURUSD is a mirror of the DXY for an obvious reason, it makes up roughly 58% of the index. We are watching a couple of key developments there to tell us whether a larger correction could take shape or a trend resumption is on the horizon. GBPUSD has less clarity in direction, but clean levels to watch. AUDUSD and NZDUSD rebounds are both at critical junctures, with the latter at a good inflection point for those looking for it to turn lower. USDJPY broke above a key area in the 111s last week, and is now holding it as support thus far. We will respect trend and support until it fails. USDCAD is a mess, we will revisit at a later time when it cleans itself up.
As far as gold and silver go, they are trading nearly 1-to-1 in the opposite direction of the dollar right now. Gold is treading below former support (now resistance) between 1190 & 1200, which favors more weakness. Silver is mirroring the dollar with its pattern sequence. We touched a little on trading the dollar and precious metals given their high inverse relationship and the managing risk which comes with it.
Crude oil has been swinging wildly around OPEC headlines and is a market we are generally avoiding for now.
On Friday, we have the monthly US jobs report, which could be a catalyst to spur the next directional move in the dollar and related markets, but with expectations around 100% for a rate hike in December, the reaction and subsequent move may be small and/or short-lived.
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.