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 main event that will impact the dollar in the coming week is the French election. If the result of the first round of voting is unfavorable to the markets then we will see safe haven flows into the USD. If the result is favorable to the market then we could see the EUR rise substantially, which would pressure the USD and support global risk-on flows. Big picture, monetary policy divergence should continue to support the dollar bull trend, as will President Trumps growth initiatives (if they come through). Data has been poor out the US but not enough to influence the Fed. The bullish break out in bonds is perhaps failing with the formation of a weekly bearish reversal candle, which is supportive of the USD. Wait for now.
- Buy GBP/USD. Trend – MT is bull normal. Our entry at 1.2660 was triggered on the back of a surprise announcement of an early UK election. The pair has held onto gains despite modestly poor data. Brexit concerns will be on the back foot for a while now. Continue to buy.
- Sell USD/JPY. Trend – MT is bear normal. A potential failure of the bullish breakout in bonds has keep the pair from falling further, despite poor US data. Kuroda has affirmed that the there is no end in sight to the BOJ’s easing policy. Watch for risk aversion (or lack of) this week, depending on the French election results.
- Wait AUD/USD. – MT is sideways normal. Last weeks caution about the bullish reversal was accurate as AUD struggled with the falling Iron Ore price in the initial part of the week. Later in the week Iron Ore recovered supporting the AUD and we are now stuck mid range. My preferred strategy would be to sell through .7440 for a move back down towards .7200.
- Wait EUR/USD. – MT is sideways volatile. A great deal of uncertainty exists around the French election with the polls hard to pick. If Le Pen and Melenchon win this weekend, then I would not be surprised to see the EUR fall several hundred pips towards parity (this scenario is seen as unlikely). If Macron and Fillon are voted into the second round then the EUR could rise substantially with the Euro-skeptic candidates knocked out of the race. The rest is all in degrees depending on who gets in and how much of the vote they get. For traders, it’s best to wait for the outcome and assess things from there.
- Wait NZD/USD. – MT is sideways normal. The Kiwi has found support on the back of rising dairy prices and some good data. We are mid range and have opportunities to buy above .7075 or sell below .6920 if we get a resumption of risk aversion.
- Wait USD/CHF. – MT is sideways volatile. The Swiss Franc will be a beneficiary of any risk-off scenario around the French election. Perhaps one to watch on the crosses.
- Buy USD/CAD. Trend – MT is bull normal. USDCAD was brought on the back of falling oil prices, where markets are concerned around a continuation of OPEC cuts. The falling oil price should continue to support the pair.
- Sell EUR/GBP. Trend– MT is bear normal. The pair hit our .84 and .83 targets on the back of the early UK election call by Prime Minister May. We can continue to sell this week but with much caution as we have bounced off major support and, of course, we must wait and see what happens regarding the French election on all EUR pairs.
- Wait EUR/CHF. – MT is sideways normal. Sell below 1.0650
- Sell AUD/JPY. Trend – MT is bear normal. Continue to sell.
- Sell NZD/JPY. Trend – MT is bear normal. Continue to sell.
- Wait GBP/JPY. – MT is sideways normal. Wait.
- Sell EUR/JPY. Trend – MT is bear normal. Continue to sell.
- Sell CAD/JPY. Trend – MT is bear normal. Continue to sell.
- Sell CHF/JPY. Trend – MT is bear normal. Continue to sell.
- Buy GBP/NZD. Trend – MT is bull normal. Continue to buy.
- Wait EUR/NZD. – MT is sideways normal. Wait.
- Wait AUD/NZD. – MT is sideways normal. Wait.
- Wait EUR/AUD. – MT is sideways normal. Wait.
- 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.
- Wait EUR/CAD. – MT is sideways volatile. Wait.
- Buy NZD/CAD. Trend – MT is bull normal. Buy above .9520. Lower conviction.
- Buy GBP/CHF. Trend – MT is bull normal. Continue to buy.
- Wait CAD/CHF. – MT is sideways normal. Wait.
- Wait NZD/CHF. – MT is sideways normal. Wait.
- Wait AUD/CHF. – MT is sideways volatile. Wait.
- Buy Gold. Trend – MT is bull normal. Continue to buy.
- Wait Oil. – MT is bull volatile.Good option for short-term traders.
- Wait S&P 500. – MT is sideways normal. Wait.
- Wait DAX. – MT is sideways normal. Wait.
- Wait T-Notes – MT is bull normal. While we remain in a bull MT, there are signs of a reversal, so best to wait for now for a resumption of the up-trend.
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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.