Markets covered in this week’s weekly forex forecast
DXY, EurUsd, AudUsd, NzdUsd, GbpUsd, UsdChf, WTI, UsdCad, NzdJpy, NzdChf, AudJpy, AudChf, SPX, RUT, NDX, Nifty, DJIA, XauUsd, XagUsd & Bitcoin.
Weekly notes
Last week saw the previous 3 month Risk Off play come to an end as the DXY looks to have formed a near term top, sending the New Zealand Dollar and Australian Dollar soaring in the process.
The technicals and the fundamentals seem to be aligning for a top in the Dollar Index. A monthly reversal candle combined with a big downside miss in US Non Farm Payrolls last week saw markets pivot to Risk On for the first time in over 12 weeks, setting up a decline in the Dollar Index to the 88.46 - the long term target for the Dollar Index in previous Weekly Forex Forecasts. Last weeks Non-Farm Payrolls miss clearly has the markets believing the FED will have no choice but to delay tapering and esecially and therefore also any Rate hikes.
With Interest Rate Decisions this week out of Australia, Canada and Europe, all eyes will be on the Dollar Index for further declines which would confirm the Inflationary pivot in the Forex markets last week.
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Editors’ Picks
EUR/USD retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
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Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.