Pairs in Focus This Week: EUR/USD, GBP/USD, and more

EUR/USD

The EUR/USD has rallied a bit during the trading week, slicing through the 200-Week EMA and the 1.12 level. Now that we are broken above here, based upon the idea that the inflation issues in the United States are cooling down, it looks like the euro might end up being one of the big winners. Short-term pullbacks at this point in time should continue to attract buyers, with the 1.10 level underneath offering a certain amount of support as it is a large, round, psychologically significant figure.

The GBP/USD bounced from the 200-Week EMA, and then jumped above the 1.30 level. By doing so, the market has now taken on the 1.31 handle, and looks like it could go as high as the 1.3250 level over the longer term. Short-term pullbacks will be buying opportunities based on what the charts show, and of course the idea that inflation is going to drop in America. At the same time, the United Kingdom still has to fight rising inflation, which means a tightening of monetary policy. Underneath, the 1.2650 level underneath offers a bit of a “floor the market.”

The USD/JPY has plunged rather significantly during the course of the trading week, as inflation numbers in the United States suggests that the battle against inflation is starting to cool off, and that drove down some of the bond market expectation. That being said, the ¥138 level is an area that we previously had seen some resistance in the form of an ascending triangle, and it’s worth noting that Friday has seen a bit of a turnaround. If the market can take off and recapture the ¥140 level, then I think this pair has a real shot at going back to the recent highs.

The USD/CAD has spent most of the week falling, but it has also found quite a bit of support at the 200-Week EMA, which is right around the 1.31 level. The market is likely to continue to see a lot of noise in this area, but if we can take out the top of the candlestick from the previous week and the 50-Week EMA, the US dollar could find itself trading near the C$1.36 level rather quickly. If we break down below the 200-Week EMA and the bottom of the candlestick for the week that we just printed, then I think the 1.30 level gets targeted.

The Australian dollar has turned around against the Japanese yen during the course the week after initially plunging toward the 50-Week EMA. The 50-week EMA does attract a certain amount of attention, and the fact that the weekly candlestick has formed a hammer suggests that the market is likely to turn around and rally. If we break above the top of the candlestick, then we could go look into the ¥97.50 level above, which was the reason. Keep in mind that a lot of this will come down to risk appetite as well.

The New Zealand dollar has had a strong week, breaking above the 0.6350 level, and threaten the idea of breaking out to the 0.65 handle. On the other hand, if we turn around and pull back from here, then we could go looking to the 0.62 level. All things being equal, the market is likely to continue to move based on the US dollar more than anything else, so keep an eye on what’s going on in the US Dollar Index, as the greenback tends to move in the same direction overall.

The AUD/USD has rallied significantly during the course of the trading week to test the 0.69 level, an area that is a large, round, psychologically significant figure. If we can break above the top of the candlestick for the Wii, then it’s likely that we could go to the 0.7050 level. On the other hand, if we turn around and break down below the 0.68 level, then it opens up a potential return toward the 50-Week EMA. Much like the New Zealand dollar, this is going to be more about the US dollar than anything else.

The NASDAQ 100 has broken well above the 15,250 level, and even broke above the 15,500 level. Short-term pullbacks do offer opportunities to get long, as this is a market that obviously looks like it’s ready to go much higher. I have no interest in shorting this market, and I do think that we continue to find ourselves in a “buy on the dip” type of situation. Shorting isn’t even a thought until we break down below the 50-Week EMA, which is closer to the 14,000 level.

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