Trading Outlook: US Dollar Vulnerable as Yellen, Draghi Set to Speak
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Today, we focused on the weak posturing of the US dollar as we head into speeches by Fed Chairwoman Janet Yellen (14:00 GMT) and ECB President Mario Draghi (19:00 GMT). The US Dollar Index (DXY) is in the top of a long-term support zone, but has room to head lower. In the short-term, the index is poised to breakdown, and with today’s catalysts on deck the path of least resistance lower looks more likely than not to be continued.
EURUSD is coiling up on the 4-hr ahead of today’s events within the construct of an overall bullish price sequence on the daily time-frame. GBPUSD is trying to lift from a confluence of important horizontal support in the mid-12700s and a lower parallel line extending higher from a swing-low carved out in April. AUDUSD is attempting to turn from trend-line support. USDCAD looks headed towards sub-12400, in-line with the sell-off starting back in May.
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Gold and silver are both coiling up within rising channels; both are holding the lower channel line while building out triangle formations. It will be important to see gold break and hold above the twin peaks created in April and June along with the 1300-threshold. Today may provide the catalyst to do just that.
Crude oil is a bit of a mess, but the overall bias remains for lower prices, however; it will be important to see WTI trade firmly back below 47 before downside momentum can kick in again.
Equity indices are the hardest place to be right now, as choppy market conditions make the outlook murky. The S&P 500 is in a state of limbo between bullish and bearish, while the DAX continues to develop a triangle formation within the context of a triggered ‘head-and-shoulders’ formation.
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---Written by Paul Robinson, Market Analyst
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