Note that this is my current view, but if market conditions change my view can change too. Generally I will trade in alignment with what I have noted here, though I will wait for a set-up before I enter. I base my view on technical and fundamental information. This is my beliefs and you are welcome to have opposite ones. Having a plan is more important than the actual direction for me.
- Wait DXY– MT is sideways normal. The Dollar Index this past week had another shot at the 99 level where it again found substantial resistance and consequently was pushed firmly back into the recent range. In the US though, while manufacturing data might have been weakening of late, consumer sentiment and inflation are still showing no real sign of the economy being in any kind of trouble. The market is pricing in a 100% chance of a 25bp cut at the upcoming FMOC meeting, but the odds of a stronger move by the Fed have been falling. If the statement accompanying the rates decision and/or Powell’s press conference speech contain enough optimism, we could see the USD try to rise once more.
- Buy GBP/USD. – MT is bull normal. As a no-deal Brexit becomes less and less likely the Pound finds the strength to push to the edge of the 1.25 – 1.27 resistance zone – we see this as a bullish development for the pair. Uncertainty of course remains high, but sentiment could have turned a corner. Following the break of the inside bar we highlighted last week the Pound is now touching a resistance area from which we might see a push back. If the recent, and now broken, resistance at 1.24 shows a change of polarity and becomes support that would be enough evidence to support a bullish bias moving forward. In the coming week we expect a Supreme Court ruling on whether it was unlawful or not to prorogue Parliament, but it is unclear if the decision could have an impact on the current Brexit sentiment. The Bank of England meets but no changes are expected, and we will also see readings on inflation and retail sales.
- Buy USD/JPY. – MT is bull normal. The break of last week’s inside bar and subsequent trading above 107 confirmed the shift in sentiment initially spurred by the easing in geopolitical tensions. The pair is now approaching potential resistance at 109, trading above it would again open the door to further upside toward 112. Japan’s Central Bank will issue its own Monetary Policy Statement this week but the FMOC meeting and Powell’s press conference will be far more influential on the pair. Another good reason to pay attention.
- Wait AUD/USD. – MT is bull normal. The fundamentals still remain mostly negative for Australia with the only bright spot so far being the domestic real estate market for established dwellings. As a risk-on currency over the past couple of weeks, the AUD has been one of the main beneficiaries from the positive developments in the Trade War between the US and China, Australia’s main trading partner. After a triple test of 0.67 the Aussie has managed to climb back to potential resistance levels near 0.69 where it is reasonable to expect at least some consolidation. The minutes to the RBA meeting that took place earlier this month will be released in the coming week as well as data on employment.
- Wait EUR/USD. – MT is sideways normal. The ECB and Super Mario did not disappoint and took fairly decisive action to which the market eventually responded positively pushing up the Euro strongly on the day. Even though the chart has painted a substantial reversal candle from the exact same level it reacted the previous week there is no denying we are still in a downtrend. Fundamentals remain weak for the Eurozone and it is really now up to the politicians to intervene with fiscal stimulus measures. In the coming week we have the ZEW Economic Sentiment Survey and eurozone inflation data but now that the ECB announcement is out of the way focus shifts to the Fed.
- Sell NZD/USD.– MT is sideways normal. The economic outlook for New Zealand remains weak and we were looking for an opportunity to sell at potential resistance around 0.650, it now seems that resistance might have been found a bit lower at 0.645. In the coming week we will see the release of the quarterly GDP figures.
- Wait USD/CHF. – MT is bull normal. With risk-on sentiment weighing on both USD and CHF the pair has remained range bound. During the week we neither had a close below the previous Friday’s low to take us back down toward 0.97 nor a strong close above the week’s high to lead us toward the 1.01/1.02 zone. That guidance remains in place in for now however, with equities pushing toward new highs, we are developing a bias to the upside.
- Wait USD/CAD. – MT is sideways normal. A hawkish Bank of Canada Rate Statement followed by stronger employment numbers and Ivey PMI provided the catalysts to take the Loonie out of the trading range it had been for over a month and we were expecting a move back down toward 1.300 as a likely scenario. However a substantial fall in oil prices and perhaps scepticism about the strength of the Canadian economy have taken the pair well back into the previous range.
- Sell EUR/GBP. – MT is bear normal. After reversing from long term resistance at 0.93 five weeks ago, the pair has continued to move lower on a weekly basis. The outlook for the Euro remains bearish, however Brexit headlines will be an influence for the short-term movements in the pair.
- Buy EUR/CHF. – MT is bull normal.
- Buy AUD/JPY. – MT is bull normal.
- Wait NZD/JPY. – MT is sideways normal.
- Buy GBP/JPY. – MT is bull normal.
- Buy EUR/JPY. – MT is sideways normal.
- Wait CAD/JPY. – MT is bull normal.
- Wait CHF/JPY. – MT is bull normal.
- Buy GBP/NZD. – MT is bull normal.
- Wait EUR/NZD. – MT is sideways normal.
- Buy AUD/NZD. – MT is bull normal.
- Wait EUR/AUD. – MT is bear normal.
- Wait GBP/AUD. – MT is sideways normal.
- Buy AUD/CAD. – MT is bull normal.
- Buy GBP/CAD. – MT is bull normal.
- Wait EUR/CAD. – MT is sideways normal.
- Wait NZD/CAD. – MT is sideways normal.
- Buy GBP/CHF. – MT is bull normal.
- Wait CAD/CHF. – MT is bull normal.
- Wait NZD/CHF. – MT is bull normal.
- Wait AUD/CHF. – MT is bull normal.
- Wait Gold. – MT is bear normal.
- Wait Oil. – MT is sideways normal.
- Wait S&P 500. – MT is bull normal.
- Buy DAX. – MT is bull normal.
- Buy Nikkei. – MT is bull normal.
- Sell T-Notes. – MT is bear normal.
(MT = Market Type: Click for more information on market types.)
About the Author
Massimiliano Andrighetto is a currency trader and member of the team at FxRenew. If you like his writing you can follow it here. You can also get Free access to the Advanced Forex Course for Smart Traders.