The following are the intraday outlooks for USD Index, EUR/USD, USD/JPY, USD/CAD, and Spot Silver as provided by the technical strategy team at SEB Group
USD INDEX (DXY): Not much room left to rise. The overextended (261,8% of wave 1 instead of the more common 161.8%) wave 3 advance is now near its end. More ending pieces of information is the fact that we now seems to be forming a rising wedge, a terminating pattern and that the past peaks (in the wedge) are accompanied by falling tops in momentum indicators creating a bearish divergence. A drop below 84.22 and the downside correction probably underway.
EUR/USD: Still a persisting bull divergence. The drop below 1.2834 became exactly the kind of low conviction move that one expects to see very late in a trending move, The total absence of follow through selling together with the still persisting bull divergence still makes a case for a completed down sequence hence an even greater correction risk than before. Above 1.2889, Friday’s mid body point, will add credibility to an emerging correction and above 1.2929 it will be confirmed.
USD/JPY: So far responding to the top line. Having met most of the short term targets (wedge ceiling, triangle target and the 2002 top line) the pair is showing signs of cooling down. With many dollar pairs at or close to short term turning points we wonder if not also USD/JPY should follow suite and retrace lower. The strongest signal will be given should the pair return into the rising wedge formation (i.e. breaking below 107.50) calling for the “throw over” to have ended.
USD/CAD: A correctional low may be in place. As said before – the road higher is a winding path. Support was respected Fri, but a move back over 1.1023 is needed to confirm a correctional low. If this move unfolds as hoped for, the recent 1.11 peak should thereafter be prey as would a prior 1.1280 high. Current intraday stretches are located at 1.0915 & 1.0980.
Spot Silver: In a complete rout. In the short-term perspective conditions are all-out stretched, but few seem to care. Let’s see if medium-term investors are still at their senses, using the medium-term stretch (10% off the 21week exponential moving average) to buy back some shorts or not. If they do, which seems likely, a 18.25 re-test should materialize. But if they don’t, looks for extension towards 17.13 before they get another reason to respond to the dropout.
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