Trading Outlook - EUR & GBP Strength to Persist; Equities Still Bearish
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Today we looked at the ongoing US dollar weakness, with GBPUSD and EURUSD in focus to continue higher. GBPUSD has been consolidating nicely, and looks poised to soon gain traction. Still targeting 13400/500 in the weeks to come. EURUSD is squaring off at pretty solid resistance, but with a little more push it will be above and we’ll use resistance as a source of support. Eyeing 11300 and higher. USDJPY is lacking clarity, as are its cross-rates – so for now steering clear.
In the cross-rate space, GBPNZD is looking solid and working towards a breakout; generally speaking, GBP crosses look bullish. The same can be said for EUR crosses, sans EURGBP which is at confluence of resistance within a broader descending wedge.
USDMXN responded sharply lower off key resistance around 19.20, and with a little more time a longer-term trend-line could be broken bringing a continuation trade from last year into play. USDZAR is forming a triangle, with a little more time a compelling trade could emerge.
Crude oil is continuing to press up against an important trend-line it broke not long ago. A turn lower could bring in another leg to the low-40s.
Global indices look vulnerable to further weakness. The S&P 500 below 2380 keeps a short bias in place. Looking towards 2322/29 as the next target zone on another leg down. The DAX below 12660 keeps it pointed lower. The FTSE presents a more difficult chart-scape, with it caught between lines of support and resistance.
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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.