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.
- Sell DXY. – MT is bear normal. A dovish FOMC meeting has seen the USD continue to sell off. Support can be found around 0.96 or 0.95. It’s a safer play to wait for a move back to 0.95 before considering to buy again. The Fed has opened the door to rate cuts and there is some talk of a 50 basis point cut at the next meeting and then a further cut later in the year. While this is certainly possible, longer-term, I prefer to trade the view that there will be at most two cuts this year. For the week ahead, sentiment should remain bearish so look to sell USD.
- Wait GBP/USD. – MT is sideways normal. A second bullish engulfing week in three weeks has formed a minor double bottom. It’s safest to wait for break above 1.28 before trading it. The BOE remains one of the most hawkish central banks. A new prime minister is in the midst of being selected and it looks like the chances of a hard Brexit have increased with candidates preferring a no deal Brexit over no exit at all.
- Sell USD/JPY. – MT is bear normal. Falling US yields, a dovish Fed and doubts that Japan can do any more effective easing are driving the pair lower. Continue to sell with a target of 105.00
- Sell AUD/USD. – MT is bear normal. The bear MT remains in-tact as does the longer-term downtrend. While the Fed has shifted to a more dovish stance, so has the RBA. This may keep gains in the Aussie limited. There is a potential meeting between Trump and Xi to discuss trade at the end of the week. While this is a positive step, it is unlikely that it will solve any of the thorny issues that have seen a cessation of trade negotiations for the past six weeks. Wait for a reversal signal before getting short in the week ahead.
- Buy EUR/USD. – MT is bull normal. Bigger picture the EUR remains range bound, but for now we are in a upward phase. The key figure for me is 1.15. This should act as a logical target and traders in the week ahead can look for buying opportunities for a move towards it. Once reached I expect the range to be held and 1.15 may act as a key resistance level and provide a nice selling opportunity. While the Fed has become more dovish, the ECB has too (although they have less room to maneuver). Data is not great out of the Eurozone, though there was a little spark of light on Friday with PMI’s not as weak as expected. Unless the data really does turn around or the Fed does aggressively cut rates, it should be hard for the pair to hold above 1.15-16 in coming months.
- Wait NZD/USD. – MT is sideways normal. Kiwi has bounced a bit on USD weakness and slightly better GDP data. The key to the near-term future for NZD is the upcoming RBNZ meeting. Given bearish USD sentiment, if the RBNZ come in a bit more hawkish than expected, then we could see a nice little bounce in the pair. The odds are against this though, with the RBNZ likely to reiterate it’s dovish stance.
- Sell USD/CHF. – MT bear normal. Nervousness around the geopolitical situation between the US and Iran (where Iran shot down a US drone and the US only just backed out of launching retaliatory airstrikes), along with bearish USD sentiment have seen the downtrend in the pair continue.
- Sell USD/CAD. – MT is sideways normal. The fundamentals have been signaling a change in the longer-term trend and we may have seen that with the pair now trading below 1.32. Yields and data both favor CAD strength. This is perhaps the best option to play vs. US if you think that we will see a period of USD weakness.
- Buy EUR/GBP. – MT is bull normal. We may be starting to see some signs of topping. But there is no reversal signal yet and we don’t want to try to catch a “falling knife” ( or in this case a rising one). For bulls, it may be prudent to take some profit, otherwise buying remains the correct strategy.
- Sell EUR/CHF. – MT is bear normal.
- Sell AUD/JPY. – MT is bear normal.
- Sell NZD/JPY. – MT is bear normal.
- Sell GBP/JPY. – MT is bear normal.
- Wait EUR/JPY. – MT is sideways normal.
- Wait CAD/JPY. – MT is sideways normal.
- Buy CHF/JPY. – MT is bull normal.
- Wait GBP/NZD. – MT is sideways normal.
- Buy EUR/NZD. – MT is bull normal.
- Wait AUD/NZD. – MT is sideways normal.
- Buy EUR/AUD. – MT is bull quiet.
- Buy GBP/AUD. – MT is bull normal.
- Sell AUD/CAD. – MT is bear normal.
- Sell GBP/CAD. – MT is bear normal.
- Wait EUR/CAD. – MT is sideways quiet.
- Sell NZD/CAD. – MT is bear normal.
- Sell GBP/CHF. – MT is bear normal.
- Sell CAD/CHF. – MT is bear normal.
- Sell NZD/CHF. – MT is bear normal.
- Sell AUD/CHF. – MT is bear normal.
- Buy Gold. – MT is bull normal.
- Wait Oil. – MT is sideways normal.
- Buy S&P 500. – MT is bull normal.
- Buy DAX. – MT is bull normal.
- Buy Nikkei. – MT is bull normal.
- Buy T-Notes. – MT is bull normal.
(MT = Market Type: Click for more information on market types.)
About the Author
Sam Eder is a currency trader and author of The Consistent Trader and the Advanced Forex Course for Smart Traders (get free access). He is the owner of www.fxrenew.com a provider of Forex signals from ex-industry traders (get a free trial). If you like Sam’s writing you can subscribe to his newsletter.