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.
- Buy DXY. – MT is bull normal. The price action is significant on the Dollar Index. The index has broken through major resistance. There is no reversal pattern as yet. This is indicative that there is further upside potential in the Dollar. This coming week the Federal Reserve meets and has a press conference. We cannot expect much change in the rhetoric as yet and the message is likely to remain that they are willing to be patient. At such a critical technical level any adjustment may be quite important. US data continues to be strong, including a GDP beat on Friday. While the headline number was much higher than expected, the internals of the report were not good enough to substantially move the USD. The US stock market is near record highs and stock earnings have been strong. This should continue to encourage the flow of capital into the US, which is Dollar positive. There is the potential for a trade deal with China in May or early June. This is also good for the Dollar. Watch out for NFP in addition to the FOMC this week.
- Sell GBP/USD. – MT is bear normal. GBP pushed through 1.30 resistance on the back of a strong dollar. There is no resolution to the Brexit impasse in sight. This will continue to weigh on the pair. The BOE meets this week. Data has not been too bad out of the UK, but weak inflation and Brexit concerns should keep the BOE conservative. Look for a move towards 1.28 in the coming week.
- Wait USD/JPY. – MT is sideways normal. Despite rising stocks and the a very dovish BOJ, the pair has not been able to sustain the break above 1.12. There is a busted breakout technical pattern. Golden week holidays are upcoming and perhaps there is not a willingness to hold positions in USDJPY considering the liquidity issues the pair has had on Holidays recently.
- Wait AUD/USD. – MT is bear normal. As mentioned last week the price action looked bearish. We saw a dramatic sell off in the AUD all the way down to the key .70 figure. Poor CPI was the fundamental driver. A morning star candlestick pattern has formed, but with the USD holding onto its bull MT, it is risky buying from here. I think best to wait and see for now.
- Sell EUR/USD. – MT is bear normal. After consolidating above support, the pair broke though the key 1.12 figure. Perhaps we finally have the breakout that we have been waiting for. The follow though has not been strong, but neither has there been much of a bounce. To add to the USD picture outlined above, EUR data continues to under-perform. The EUR also sold off if sympathy with a more dovish stance from the Swedish Riksbank. The divergence theme seems clearly at play here. This is a high conviction sell, in particular, the risk/reward is very good if you are short.
- Wait NZD/USD. – MT is bear normal. Support has now been broken. We got the move to .6580 that we were anticipating last week. After support was taken out, the pair recovered strongly. This was due to much better than expected trade data. While we remain in the bear MT, we would want to see the downtrend resume before considering the pair.
- Wait USD/CHF. – MT sideways normal. The fundamentals are supportive of a continuation of the bull MT towards 1.03. Price action is a little consolidative but no reversal pattern is in place.
- Buy USD/CAD. – MT is bull normal. The pair broke out of the sideways quiet MT on the back of both USD strength and a more dovish than expected BOC. The pair has closed back inside the range on Friday so momentum is not strong. Note that Oil sold off on the week, but there is not a great deal of correlation going on right now. Market sentiment seems to be mostly focused on the the USD.
- Wait EUR/GBP. – MT is sideways normal. The pair is trapped in a range between 0.8730 and 0.8480. Volatility has died down. There is some minor bearish price action here which suggests we will stay range bound.
- Buy EUR/CHF. – MT is bull normal.
- Sell AUD/JPY. – MT is bear normal.
- Sell NZD/JPY. – MT is bear normal.
- Sell GBP/JPY. – MT is bear normal.
- Sell EUR/JPY. – MT is bear normal.
- Sell CAD/JPY. – MT is bear normal.
- Sell CHF/JPY. – MT is bear normal.
- Wait GBP/NZD. – MT is sideways quiet.
- Wait EUR/NZD. – MT is bull volatile.
- Wait AUD/NZD. – MT is bull volatile.
- Wait EUR/AUD. – MT is sideways quiet.
- Wait GBP/AUD. – MT is sideways normal.
- Wait AUD/CAD. – MT is sideways normal.
- Wait GBP/CAD. – MT is sideways quiet.
- Wait EUR/CAD. – MT is sideways quiet.
- Sell NZD/CAD. – MT is bear normal.
- Buy GBP/CHF. – MT is bull normal.
- Buy CAD/CHF. – MT is bull normal.
- Wait NZD/CHF. – MT is sideways normal.
- Wait AUD/CHF. – MT is bull volatile.
- Sell Gold. – MT is bear normal.
- Buy Oil. – MT is bull normal.
- Buy S&P 500. – MT is bull normal.
- Buy DAX. – MT is bull normal.
- Buy Nikkei. – MT is bull normal.
- Wait T-Notes. – MT is sideways normal.
View bank reports and fundamental analysis in the chatroom (members only)
Economic calendar for the week ahead:
(MT = Market Type: Click for more information on market types.)
About the Author
Sam Eder is a currency trader and author of the Definitive Guide to Developing a Winning Forex Trading System 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-bank and hedge fund traders (get a free trial). If you like Sam’s writing you can subscribe to his newsletter.