Greenback was the king roaring all week pinning down its counterparts finally beginning to pause towards the end of the week — whether it just turns out to be a breather or start of a significant correction remains to be seen. Continued weakness in European currencies & emerging markets’ problems helped USD stay on a bullish trajectory. Better than expected Non Farm payroll numbers out of U.S. gave it a further impetus.
Analyzing the Dollar Index chart shows the correction might finally be on the way. DXY has receded from the MT resistance level of 95.00 to close @ 93.97 — also the overbought RSI has fallen below the 70 level pointing to corrective weakness to 92.80. The up move does look a little over extended here with the softness expected in the short term.
Summarizing the USD Majors, this week was an eventful one with the European duo (Euro & Pound) fell to fresh weekly lows of 1.1511 & 1.3208 respectively on the back of weak economic numbers out of Europe & ongoing geo political risks. The most glaring move was in USDCAD where a less dovish BoC rate hold made the pair plummet to 1.2820 before sharply rebounding to psychological barrier of 1.3000 on news of imposition of U.S. import duties on Aluminum & Steel. This will also have negative implications for NAFTA renegotiation which looks almost certain to fall apart now. Rebound in U.S. equities on Friday proved helpful for the USDJPY to turn back up from the recent lows of 108.15 — the larger downtrend still seems intact. The commodity duo of AUDUSD & NZDUSD are shaping constructive moves in the Short term in the larger downtrends. Let’s look at the individual trends for the Majors & things to watch out for in the coming week.
EURUSD (Euro, MT bearish, ST bearish): With the break of the MT support zone Euro has flipped the sentiment to the downside & the emerging financial & political risks from the Euro zone will likely put further downward pressure on the single currency. These are the daily levels to look for in the coming week
Levels: S3:1.1523 — S2:1.1606— S1:1.1656 — R1:1.1740 — R2:1.1774 — R3:1.1858
USDJPY (Yen, MT neutral, ST bearish): What a turnaround it has been in this direction determining pair. With risk off sentiment in the Equities creeping in earlier this week it fell from the highs of 111.45 tracking the sentiment in markets. Daily levels to watch for next week.
Levels: S3:107.48— S2:108.10— S1:108.44 — R1:109.06— R2:109.34 — R3:109.97
GBPUSD (Pound, MT bearish, ST bearish) : Pound has been tracking the weakness in its European counterpart with weak economic numbers out of UK & Europe. The length process of BREXIT negotiations is creating another risk along with mainland European woes. Daily levels to watch for next week.
Levels: S3:1.3729— S2:1.3238 — S1:1.3268 — R1:1.3339 — R2:1.3379— R3:1.3450
USDCAD (Loonie, MT neutral, ST bullish) : Most active of the trading Majors lately with the U.S trade tariff tensions along with the volatility in the prices of Oil. Not to mention the NAFTA renegotiation have been causing some wild moves in the pairs which are likely to continue in the coming weeks till the dust settles. Watch these daily levels.
Levels: S3:1.2571— S2:1.2744 — S1:1.2843 — R1:1.3016 — R2:1.3090 — R3:1.3263
AUDUSD (Aussie, MT bearish, ST bearish) : This commodity pair has been active as well with the wild swings in Equities. Important week with the Australian employment & GDP numbers due this week – expect volatility in this pair & a further confirmation of the directional bias. Daily levels next week.
Levels: S3:0.7496— S2:0.7535 — S1:0.7554 — R1:0.7593 — R2:0.7613 — R3:0.7651
NZDUSD (Kiwi, MT bearish, ST bearish) : Another star of the commodity trio gives the biggest moves with the risk on & off sentiment. Recent gains will be in question on how the markets behave in the next week. Look for these key daily levels
Levels: S3:0.6917 — S2:0.6961 — S1:0.6985 — R1:0.7029 — R2:0.7048 — R3:0.7092
USDCHF (Swissie, MT bullish, ST bearish) : This safe haven has spiked recently leading the other safe haven USDJPY with this move. Usually the uneasiness in markets would have made it to drop. But this pair can have length sentiment changing moves so next week these levels will be the key.
Levels: S3:0.9724 — S2:0.9788 — S1:0.9815— R1:0.9880 — R2:0.9918 — R3:0.9983