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Today, we started out by looking at the poor posturing of the US Dollar Index (DXY) as it sits below all major lines of support. The big Sunday gap at first gave caution as these gaps often get filled quickly, but as time passes that has become the less likely outcome. EURUSD is heading up the rally (it’s ~57% of DXY) while GBPUSD is breaking higher into open space. USDJPY is the least favorite short in the USD-spectrum at this time, even though it does sit at resistance. (A short-term set-up was outlined.)
We looked at numerous cross-rates, highlighted the disparity between several of the Yen-crosses; European vs. Yen look good, commodity currencies vs. Yen look bad. EURAUD, EURNZD have gone up huge, no interest in chasing at this juncture, a rest is due. GBPAUD on a pullback to support will be of interest as a potential long.
Watching for the USDZAR bounce to fizzle on a retest off a trend-line, overall bias is for shorts on a turn in recent upside momentum.
Gold and silver prices are weak, especially the latter. Precious metals are not responding to a weaker dollar, but if conditions become aggressive in the buck then that could change. But we aren’t banking on it. Gold is holding 1260, while silver searches for support off a trend-line of old from July. It will quickly face a challenge at the broken December trend-line. Big picture, operating off gold – as long as the yellow metal stays below the 2011 trend-line it’s difficult to get too bulled up, but it doesn’t necessarily mean it’s going to fall out of bed either from here.
Crude oil put in a slick reversal bar yesterday off a trend-line we’ve been discussing in recent webinars. It looks poise to bounce over 50, with 51.60 as a potential target. A break of yesterday’s low would be an official break of a one-year trend-line and likely lead to a further sell-off - perhaps a big one.
Global indices are generally strong, with confidence the lowest in the FTSE 100. The S&P 500 and Dow look poised to join the Nasdaq 100 to new record highs. The DAX is holding well above its recent breakout level, top-side lines noted as the next lines of resistance with further strength. The Nikkei has been a difficult read, but recent momentum looks likely to carry it up towards 19600 at the least.
For full technical considerations, please see the video above.
See our quarterly forecasts for FX, equity indices, and commodities to see where our team of analysts see markets heading for the remainder of Q2.
---Written by Paul Robinson, Market Analyst
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