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Today, we looked at the continued weakness in the US dollar, and while it may be short-term oversold when looking at the DXY it still has room to go before support close to 94. On that, the euro (~57% of the DXY weighting) has eyes for 2016 highs at over 11600, and maybe over 11700 (8/2015 high) with the help of the ECB tomorrow. The path of least resistance suggests EURUSD will come out ahead following tomorrow’s outcome, but it could lead to an exhaustion move (buy the rumor, sell the news). GBPUSD is holding around last week’s breakout levels, still positioned for higher prices as long as it can hold above 13000. USDJPY has dropped into a support zone, we will be watching price action closely for signs of a reversal. AUDUSD is extended in the near-term, looking for a pullback towards support before looking to possibly join the surge higher.
We looked at a few of the Yen-crosses, in addition to EUR and GBP-cross rates. The Yen-crosses have cleaner charts, and of the those the ones we focused on were EURJPY, GBPJPY, and AUDJPY. Looking to EM, USDMXN continues to fall in line with expectations, looking for another failed rally to sell. USDZAR waiting on a bounce as well before looking at possible shorts.
Gold and silver are receiving a boost from the dollar currently, but at a spot where they could soon turn lower. Resistance in both precious metals provides zones to look for weakness, now it is a question of seeing price action show that there is selling interest.
Waiting on WTI crude oil to thoroughly test and reject 47; it came close yesterday and reversed from about 10 cents below the eyed threshold. That may be all we see, but a thorough testing of 47 and turn down would be of most interest.
Indices are mixed. On one hand, you have the S&P 500 trying to hold its recent breakout to record highs, and on the other you have an ominous head-and-shoulders formation continuing to work towards confirmation in the DAX. The FTSE 100 is chopping around below resistance but above a two-week range it recently broke out from; it’s a messy scene in the UK index.
For the full outlook, please see the video above…
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---Written by Paul Robinson, Market Analyst
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