The EUR/USD has fallen rather hard during the trading week, as we are now approaching the 1.05 level. This is an area that of course is a large, round, psychologically significant figure, and where we had seen the bottom of a hammer from a couple of months ago. Ultimately, we are going to have to pay close attention to the 1.05 level, and if we break down below there, then it’s likely that we go to the parity level. I believe that we are in the midst of a pretty big setup for a longer-term trade. Rallies at this point in time continue to be looked at with suspicion.
The GBP/USD initially tried to rally during the course of the trading week, breaking to the upside and it looks like we tested the 50-Week EMA before dumping. The 1.1850 level underneath is significant support, where we formed a hammer a couple of weeks ago. If we were to break down below there, then it’s likely the British pound could go down to the 1.15 handle. The shape of the candlestick is rather negative, and it looks like we are chipping away at a significant support level. I would continue to fade rallies at this point.
The USD/JPY has broken much higher against the Japanese yen yet again during the course of the week, as we are now above the ¥136 level. This is an area where we could see a little bit of noise, but it is apparent to me that we are ready to continue to go much higher. We had rallied rather significantly last year due to the Bank of Japan and its yield curve control, pulled back 50%, and now we are off to the races again. I believe it is probably only a matter of time before we reach the highs again, so I do like buying dips, and have no interest whatsoever trying to buy the Japanese yen at this point.
The AUD/USD has fallen rather significantly during the last week, as it now looks like we are heading toward the 0.67 level. If we can break below this level, then I think the icing is looking to the 0.66 level. After that, we have a significant air pocket, and it does look like the market is going to continue to see a lot of negativity at this point, so I have no interest in buying the Aussie. If it rallies, I am more than willing to sell signs of exhaustion on short-term charts.
The USD/CAD has spiked against the Canadian dollar during the trading week, breaking above the top of the descending triangle. This is a very bullish sign, but we are starting to get a little bit stretched. Unlike many other currency pairs, the USD/CAD pair does tend to be very choppy, even when the US dollar is very bullish. Because of this, I will be looking for short-term pullbacks that I can take advantage of. For some of the other ones, I’d be fine with just buying dollars here and writing through the volatility, but the Canadian dollar is a different beast altogether. I think we eventually go looking to the ¥137.50 level, and then maybe the 1.40 level.
The NZD/USD has fallen again during the week, breaking below the 0.62 level. It now looks as if the Kiwi dollar is going to continue to go much lower, perhaps trying to target the 0.60 level. Underneath there, things get extraordinarily ugly and will probably come down to the 0.58 level. It’s worth noting that the Kiwi dollar is highly sensitive to risk appetite, and as risk appetite continues to get eviscerated, this could be one to watch.
The GBP/JPY has rallied against the Japanese yen during the week, breaking well above the previous resistance barrier. We had been consolidating for what seemed like a lifetime, and now we are above it. I think at this juncture we are probably heading toward the ¥165 level, but it’s probably going to be fairly noisy between here and there. The Bank of Japan and its yield curve control continue to be a major reason why the market will continue to go higher.
The WTI Crude Oil market has fallen a bit during the trading week, as we continue to bang around in the same range. We are getting close to the $72.50 level again, so if we were to break through there, then we could go down to the $70.00 level. However, it’s just as likely that we continue to bang around between here and $82.50, so until proven differently, I assume this is a range-bound market and will trade it as such in small increments.