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In today’s webinar, we discussed the bounce unfolding in the US Dollar Index (DXY) from support – lasting or temporary? If the bounce doesn’t spawn into a rally and treads close to support, then the likelihood of it breaking down (and potentially with force) will rise with each failed attempt to move higher. EURUSD is pulling back from resistance but looks to be somewhat supported, so does GBPUSD. USDJPY is trying to mount a recovery but is already up against former support (now resistance).
We put a lot of focus on several Euro cross-rates – EURAUD, EURNZD, EURCAD, and EURJPY. All look vulnerable and have set-ups currently in progress for lower prices. Sterling crosses have similar looks, but don’t provide the same clarity, so our focus will remain on Euro cross-rates for now. USDZAR has had a razor-sharp bounce the past couple of sessions, but it has done so in the past only to fail. Resistance is close at hand, so we will be watching for a potential reversal to kick off a new leg lower. USDMXN is still on the radar as a sell.
Gold and silver are holding up well despite the USD bounce, but are up against solid resistance. They will need to clear above key lines/levels to continue the advance.
Crude oil is bobbling between two longer-term trend-lines, with 47 as the line-in-the-sand after three reversals from that level. Overall, price action looks corrective and an eventual breakdown below 47 is anticipated; 45, then 42/43 will be targeted on a close below 47.
The DAX rallied back sharply, but now faces off against a steadfast top-side trend-line extending over peaks as far back as April of last year. The CAC 40 is poking its head above a 16 ½ year trend-line, but it will require a weekly close above to give the ‘all-clear’. The S&P is rebounding, but has its work cut out for it if it is to confirm the end of a correction.
---Written by Paul Robinson, Market Analyst
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