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 – Watch the reaction around the August low. The Fed delivered a third cut in a row as expected and signalled a pause with a more optimistic tone in its statement. That did not help the green back however which lost ground every session this week and is now again testing the August lows. A break below that level could open the door to a further fall toward the March & June lows. The non-manufacturing PMI is the main potentially market moving release this coming week, particularly if it shows further signs of slowing growth.
- Wait GBP/USD. – MT is bull normal – Watch the reaction at 1.30 – A Brexit extension was granted until January 31, now the focus shifts to the upcoming parliamentary election on December 12. Since the Brexit drama is temporarily on hold the market might now be paying attention to Central Bank communications and economic data. Last month’s PMIs showed all sectors of the economy are in contraction territory, this week we have an update on Construction and Services while the BOE releases its quarterly Inflation Report and the Monetary Policy Summary. No change to the cash rate is expected. Cable is likely to remain rangebound between 1.30 resistance and 1.27 support until the election. Trading above 1.30 however could signal a greater underlying strength.
- Wait USD/JPY. – MT is sideways normal – Watch if 108 holds – The recent tight consolidation we saw just above 108.50 resolved with an unsuccessful attempt of breaking 109 which sent the pair lower finding temporary support at 108. The BOJ this past week downgraded its forecast for GDP and inflation which it sees as a form of easing, this and a general improvement in risk sentiment mostly reflected in strong equity markets should support the pair. However, if the current USD weakness persists, we could see it move lower toward 107 support.
- Buy AUD/USD. – MT is bull normal – Watch if it holds above 0.69 – Following the October rate cut the Aussie put in place a fourth rejection of 0.67 indicating that the pair might have found a bottom. The catalyst to potentially justify higher prices came shortly after in the form of the U.S. – China positive trade talks in Washington. Subsequent data also showed a modest fall in the unemployment rate which gave the pair enough strength to push through resistance first at 0.68 and then at 0.69 where it is currently resting. This past week inflation readings came in on consensus but Building Approvals surprised to the upside. If Retail Sales figures due out at the start of the week come in better than expected we might see a consolidation above 0.69 and potentially a mover higher. The RBA meets and releases its quarterly Monetary Policy Statement later in the week. Whilst still in an easing cycle no further cut to the cash rate is expected until February next year.
- Buy EUR/USD.– MT is bull normal – Watch 1.12 for potential resistance – While conditions remain dire for the European economy the Euro seems to have recently benefited from the prospect of a positive resolution to the Brexit saga as well as from broad USD weakness. Over the past week Flash Core CPI also came in better than expected and there’s hope the new ECB President Christine Lagarde, a former French Finance Minister and IMF Managing Director, might be able to convince the Governments of richer European countries like Germany and the Netherlands to adopt long called for fiscal stimulus measures.
- Wait NZD/USD. – MT is bull normal – Watch for break or reversal at 0.645 -Together with the Aussie the Kiwi has benefitted from the recent improvement in risk sentiment following the positive U.S. – China trade talks. Whilst the economic backdrop remains weak the aggressive RBNZ action back in August seems to have started filtering through to the consumer with a pick-up in in the housing market, including new constructions approvals, and an uptick in inflation readings. Business confidence however remains very low. Before the next Monetary Policy meeting on November 12 there are two important pieces of data which may determine whether a further rate cut is warranted, these are the quarterly Employment Survey this coming week and the quarterly RBNZ Inflation Expectations the next, just ahead of the Central Bank meeting.
- Wait USD/CHF. – MT is sideways normal – Watch reaction at 0.985 – For the past four months price action in the Swissie has been contained in a 3% range between parity and 0.97. Recently however movement has been limited to the upper part of this wider range with 0.985 acting as support in three occasions and now is being tested for a fourth time.
- Sell USD/CAD. – MT is bear normal – Sell from the resistance zone at current levels – A dovish hold by the Bank of Canada and a downgrade of its forecasts within its quarterly Monetary Policy Report resulted in the CAD being the only major currency to lose ground versus the USD this past week. The Loonie is finding resistance at the 1.315 – 1.320 zone and it might move back down from here. To pay attention to we have the Trade Balance and Employment data, as well as Ivey PMI and Housing Starts.
- Sell EUR/GBP. – MT is bear normal. The downtrend which kicked off in mid-August resumed strongly after a 2 week pause thanks to the emerging Brexit deal. The Euro however seems to have been benefiting also from the easing in geopolitical tensions, Brexit and the US/China Trade War. With the latest developments being a Brexit deadline extension and an upcoming UK election the pair has been consolidating just above 0.86 for almost 3 weeks now. There could be a little bit more of a pullback within the 0.87-0.88 resistance area before the downtrend resumes once again.
- Wait EUR/CHF. – MT is sideways normal – Sitting at 1.100 support.
- Buy AUD/JPY. – MT is bull normal – Watch 0.75-0.76 resistance zone.
- Buy NZD/JPY. – MT is bull normal – Watch 0.70 resistance.
- Wait GBP/JPY. – MT is bull normal – Consolidating, buy above 141.
- Wait EUR/JPY. – MT is bull normal – Consolidating.
- Wait CAD/JPY. – MT is sideways normal – Sitting at 82 support.
- Wait CHF/JPY. – MT is bull normal – Watch 110 – 110.5 resistance
- Wait GBP/NZD. – MT is bull normal – Consolidating.
- Wait EUR/NZD. – MT is sideways quiet – May be reacting to 1.73 support.
- Wait AUD/NZD. – MT is bull normal – Watch 108 resistance.
- Sell EUR/AUD. – MT is bear normal – Watch potential support at 1.61.
- Wait GBP/AUD. – MT is bull normal – Buy above 1.89
- Wait AUD/CAD. – MT is bull normal – May be rejecting 0.91 resistance.
- Wait GBP/CAD. – MT is bull normal – May be rejecting 1.71 resistance.
- Wait EUR/CAD. – MT is sideways normal. May be rejecting 1.47 resistance
- Wait NZD/CAD. – MT is bull normal. May be rejecting 0.85 resistance
- Wait GBP/CHF. – MT is bull normal. May be rejecting 1.28 -1.29 resistance
- Wait CAD/CHF. – MT is sideways normal.
- Wait NZD/CHF. – MT is bull normal. May be rejecting 0.635 – 0.640 resistance
- Buy AUD/CHF. – MT is bull normal. Watch 0.685 resistance.
- Wait Gold. – MT is bull normal. Approaching resistance at 1520.
- Wait Oil. – MT is sideways normal.
- Buy S&P 500. – MT is sideways normal. Making new all-time highs.
- Buy DAX. – MT is bull normal.
- Buy Nikkei. – MT is bull normal.
- Wait T-Notes. – MT is sideways 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.