Good afternoon traders. Well another week is now beginning and let's take a look at what is on the radar screen.
Last weeks soft close by the S&P's (1629) was certainly out the norm - I mean equities only go higher with 'The Bearded One' at the helm - right? Kidding aside, the move lower off the May 22nd highs is likely just part of a long overdue correction. It is certainly possible prices could move lower towards 1604 (minimum downside target if wave count is correct) while a move back above 1637 creates overlap and gives the bulls reason for hope.
I could do all sorts of further scenario analysis, but the fact is, the S&P's are not as key recently for FX markets as is the Dollar Index (DXC). This index is not only a bit cleaner in terms of the price structure/wave count but is far better correlated with the likes of EUR/USD, AUD/USD and NZD/USD.
DXC: broke down off the May 22nd highs and while some minimum Fibonacci support levels have contained the drop, the action off the May 30th lows is not convincing me just yet that a low is in place. Additionally, some of the momentum studies (triggered May 30th) I also rely on are suggesting the bears have control for the time being.
EUR/USD: the rally off the May 22nd lows is not impulsive and last week's break above 1.2997 suggests momentum/directional change could be in the works.
USD/JPY: benefit of the doubt goes to the bulls unless the 99.87 level gives way. For now I am neutral on this pair.
AUD/USD: the downtrend remains intact, no reason to look for picking a bottom at this stage. However, looking for shorts in and around current levels is not advised either.
AUD/NZD: this is the FX cross I find most interesting presently. It has been a solid downtrend since mid-March, yet on May 31, price action triggered some fresh upside momentum that may have legs. Additionally, the move above 1.2030 gives further ammo to the bulls.
EUR/NOK: last, but certainly not least, our orders to get long in EUR/NOK at 7.6435 remain in place and if EUR/USD can begin to make a move higher early in the week - this cross could catch a nice bid higher.
As always, there will be some twists and turns - but that is trading, but if you lack a plan you know the odds of making money are greatly reduced.
Recommended Content
Editors’ Picks
USD/JPY holds above 155.50 ahead of BoJ policy announcement
USD/JPY is trading tightly above 155.50, off multi-year highs ahead of the BoJ policy announcement. The Yen draws support from higher Japanese bond yields even as the Tokyo CPI inflation cooled more than expected.
AUD/USD stands firm above 0.6500 with markets bracing for Aussie PPI, US inflation
The Aussie Dollar begins Friday’s Asian session on the right foot against the Greenback after posting gains of 0.33% on Thursday. The AUD/USD advance was sponsored by a United States report showing the economy is growing below estimates while inflation picked up.
Gold soars as US economic woes and inflation fears grip investors
Gold prices advanced modestly during Thursday’s North American session, gaining more than 0.5% following the release of crucial economic data from the United States. GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the US Fed could lower borrowing costs.
Stripe looks to bring back crypto payments as stablecoin market cap hits all-time high
Stripe announced on Thursday that it would add support for USDC stablecoin, as the stablecoin market exploded in March, according to reports by Cryptocompare.
Bank of Japan expected to keep interest rates on hold after landmark hike
The Bank of Japan is set to leave its short-term rate target unchanged in the range between 0% and 0.1% on Friday, following the conclusion of its two-day monetary policy review meeting for April. The BoJ will announce its decision on Friday at around 3:00 GMT.