The EUR/USD had a bullish week, breaking above the 1.10 level, but gave back gains on Friday. It looks like there was a sudden shift in attitude, but at the end of the day this is a market that has been in the range for a while, so it should not be overly surprising to see a bit of a bounce around between the 1.10 level and the 1.05 level.
Pay close attention to the 200-Week EMA where the market stopped, because if we break above there on a daily close, it could send the Euro looking toward the 1.1250 regions. If we pull back and break down below the weekly candlestick, then it’s very likely we could go looking toward the 1.0750 level.
The GBP/USD has tried to rally during the course of the week but gave back the gains to form a shooting star candlestick as we closed out the market. This is the 2nd one in a row, and it shows just how difficult it is going to be to break above this area. With that in mind, I think you’ve got a situation where we probably start to look toward the range underneath, or at least the 50-Week EMA. That being said, if we can break above the high of the week, that would obviously be a very bullish sign, opening up the possibility of a move toward the 1.2750 level.
The USD/CAD has reached the bottom of its range against the Canadian dollar during the week and now looks like it is poised to attempt to make a recovery. We have been trading between 1.33 and 1.38 for some time, it looks like we may see more of the same. That being said, if we break down below the bottom of the candlestick for the week, it could open up a move down to the 200-Week EMA which sits just above the psychologically important 1.30 level.
The West Texas Crude Oil market did very little during the week, but it is sitting right around the top of the overall consolidation area that we have been in for a while, so it at least shows the proclivity to try and break out to the upside. If the market were to break above the top of the candlestick, then it opens up the possibility of a move to the $85 level, followed by a move to the $90 level. Ultimately, if we break down below the bottom of the candlestick, then it opens up the possibility of reaching the $77.50 level.
Gold markets initially spiked for the week but have turned around to show signs of weakness. At this point, it almost looks as if gold is ready to give up, perhaps pulling back toward the $1950 level, maybe even as low as $1900 level. Quite frankly, the market got a little overextended and therefore it makes a certain amount of sense that we would see the exhaustion in this area. After all, the $2000 region has been significant resistance more than once. In order to continue with upward momentum, the market would almost certainly have to break above the $2100 level.
The USD/JPY has rallied during the course of the week to break well above the ¥133 level. This is a good sign, and it does suggest that perhaps the US dollar is going to continue against the Japanese yen. Ultimately, we have bounced yet again and it looks like we formed a little bit of a double bottom. That being said, it’s also going to be a very noisy market as the Bank of Japan continues it yield curve control, and therefore will more likely than not continue to have an outsized influence on this market.
The USD/CHF plunged against the Swiss franc during most of the week, but on Friday started to see a lot of buying pressure at what would be considered to be a very extreme low in the market. Because of this, it will be interesting to see if it can maintain some momentum, but if we can recapture the 0.90 CHF level in this pair, it’s very likely that the US dollar will continue to rally for at least another 100 pips. On the downside, the 0.88 CHF level has been extraordinarily supportive more than once.
The AUD/USD has tried to rally a bit during the course of the week but gave up most of its gains as it has the last several previous weeks. Because of this, I think you continue to see this as a “fade the rally” type of market, and therefore I think it is probably only a matter of time before we try to break back down to the 0.65 level. Remember, the Reserve Bank of Australia has recently chosen not to raise interest rates.