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In this morning’s webinar, we took a look at the big rip in the US Dollar Index (DXY), several dollar-related pairs, a few cross-rates, precious metals, oil, and equity indices.
The US dollar exploded to 14-year highs yesterday, some retracement is to be expected, but at this time that is all it is likely to be before another leg up. EUR/USD broke big time support and on a retest of that prior support (now resistance) we look for it to fail and trade lower. GBP/USD broke down from a channel it had been trending nicely higher in, we will look to some resistance levels not far above as possible spots for it to turn back lower from. AUD/USD and NZD/USD continue to be on our list of shorts. USD/JPY is trading around a confluence of resistance, but instead we are looking to AUD/JPY and NZD/JPY as short candidates. EUR/AUD is trying to hold key support once again in the 141s, but at some point if it should close below support we will become interested in taking it for a ride lower.
In the precious metal space, gold continues to be a go-to short while silver finally broke after a recent run of modest strength. Gold looks headed towards the 1100 line, with short-term resistance outlined around 1140. Silver prices broke hard from over 17 to under 16 in one fell swoop. It’s an important level of support it's trading around now, but factors aren’t very supportive of it holding. A clean break below 15.80 opens up another clear path towards prices sub-15.
The reversal the other day has led WTI crude oil back below the big breakout level around 52. The market is heavily long crude and now trading back below a key area, this puts crude in a bit of a vulnerable position to head lower. No high conviction set-ups there yet, but one could soon emerge.
Equity indices are standing strong. The DAX has been unrelenting and not allowing traders in unless they paid up, a game we don’t play, so on our hands we sit. The targeted 11431 resistance from November 2015 is close at hand. We await its reaction upon arrival of this level. The CAC 40 has an upper parallel we are eyeing as potential resistance. The FTSE is holding above a confluence of support and looks poised to make a run at record highs over 7100. The S&P 500 is doing a little backing-and-filling, support not far below may allow traders a chance to establish a long for another thrust higher.
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---Written by Paul Robinson, Market Analyst
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