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. The dollar is struggling under the weight of political turmoil. President Trump has been accused of a number of wrong doings around Russia which could (though highly unlikely) lead to his impeachment. This is making the market skeptical of his abilities to drive though his pro growth reforms, which the dollar is relying upon. There are also concerns that the issues may influence the Fed to hold off on a June rate hike, or at least accompany the hike with a more dovish outlook. Note that Fed speak does remain quite hawkish, indicating they are pretty determined to hike soon. US Bond yields, which we have been watching closely, fell which is bearish USD. Not only have we broken out into a daily bear MT, but a weekly one as well, and we are now trading well below the key 100 level and can expect a more back towards 92.
- Buy GBP/USD. Trend – MT is bull normal. The GBP has been supported by good data in recent times, this is despite a dovish BOE. The other factor on traders minds is the early election, which is seen as GBP bullish. Continue to buy but wait for a break of last weeks high. Buy above 1.3060 for a move towards 1.3430.
- Wait USD/JPY. – MT is sideways normal. The yen sold off on the back of the bearish move in equities and the weakness in US bond yields. It has since bounced along with stocks which continue to be brought on every dip. Fundamentally, Japan is finally achieving some growth which is bearish USDJPY but sentiment is not really focusing on that, preferring to focus on the political risk out of the US. Wait for now.
- Wait AUD/USD. – MT is bear volatile. With the risk-off in stocks we would have expected the AUD to be much lower, but it actually rose on Wednesday, which is indicative that the USD side of the trade is driving things. There was some very good employment data out of Australia as well, but the response was muted. Iron Ore and copper both bounced which is supportive of the pair. Best to wait for more clarity here.
- Buy EUR/USD. Trend – MT is bull fast. The Euro continues to rise on the back of the unwinding of political risk in the Eurozone and the increased political risk in the US. The pair is supported by good data and the growing spread between US Bond and German Bund yields. Rising equities across the region are also attracting flows. Continue to buy.
- Wait NZD/USD. – MT is sideways normal. We continue to find support at the key .6850 level. We has a further rise in dairy prices in the last GDT auction. With the bottoming price action in place, the weakness developing in the USD and the recovery in stocks (risk-on), we canlook to buy the pair above .6980.
- Sell USD/CHF. Trend – MT is bear fast. USDCHF has moved into a fast bear MT in sympathy with the Euro and no support exists until around the .9550 region. These MT’s are good for short-term traders, if your view is longer-term, remember that bounces in these MT’s can be sharp so adjust your exit strategy so that you don’t give back too much on a reversal.
- Sell USD/CAD. Trend – MT is bear normal. We have flipped from bull to bear MT in the space of a week on the back of rising oil prices and US turmoil. We can expect oil prices to remain elevated through this weeks OPEC meeting. The BOC, whom meets this week, have been leaning to the hawkish side. Look to sell.
- Buy EUR/GBP. Trend– MT is bull normal. We broke through the .8560 level outlined in last weeks report and are holding onto gains for now. Continue to buy.
- Wait EUR/CHF. – MT is bull volatile. Wait.
- Wait AUD/JPY. – MT is sideways normal. Wait.
- Wait NZD/JPY. – MT is bull volatile. Wait.
- Buy GBP/JPY. Trend – MT is bull normal. Continue to buy.
- Buy EUR/JPY. Trend – MT is bull normal. Continue to buy.
- Wait CAD/JPY. – MT is sideways normal. Wait.
- Buy CHF/JPY. Trend – MT is bull normal. Continue to buy.
- Buy GBP/NZD. Trend – MT is bull normal. Continue to buy.
- Buy EUR/NZD. Trend – MT is bull normal. Continue to buy.
- Wait AUD/NZD. – MT is bear volatile. Wait.
- Buy EUR/AUD. Trend – MT is bull normal. Continue to buy.
- Buy GBP/AUD. Trend – MT is bull normal. Continue to buy.
- Wait AUD/CAD. – MT is sideways volatile. Wait for now.
- Buy GBP/CAD. Trend– MT is bull normal. Continue to buy, but watch out as we may well turn sideways here.
- Buy EUR/CAD. Trend – MT is bull normal. Continue to buy.
- Wait NZD/CAD. – MT is sideways normal.Wait.
- Wait GBP/CHF. – MT is bull volatile. Wait.
- Wait CAD/CHF. – MT is bear normal. But bottoming here so caution required.
- Sell NZD/CHF. Trend – MT is bear normal. Look to sell.
- Sell AUD/CHF. Trend – MT is bear normal. Continue to sell.
- Wait Gold. – MT is sideways volatile. Wait.
- Wait Oil. – MT is bear volatile. Wait.
- Wait S&P 500. – MT is sideways normal. Wait.
- Buy DAX. Trend – MT is bull normal. Continue to buy.
- Wait T-Notes – MT is sideways normal.Wait.
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Economic calendar for the week ahead:
(MT = Market Type: Click for more information on market types.)
Trend: Market is trending in the direction I have listed and I expect it to continue.
Reversal: I am looking for a reversal against the current trend.
Breakout: The currency pair is breaking out of a range.
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.