Pairs in Focus This Week – EUR/USD, GBP/USD, Gold, Oil

The euro has initially fallen during the course of the past week, but it looks like the 1.05 level is going to offer a little bit of support. Whether or not that holds for good remains to be seen, but I do think that it is probably only a matter of time before sellers return. After all, the interest rate differential continues to be quite wide, and therefore the 50-Week EMA also comes into the picture near the 1.0750 level. All things being equal, any rally at this point in time would be an opportunity to short the market at the first signs of trouble.

The British pound has rallied after initially falling during the week, just as we have seen the Euro do. At this point, it’s possible that both of those currencies are oversold, and of course the US dollar is overbought. I think given enough time we will probably see some type of pushback, maybe closer to the 1.2350 level, possibly even the 50-Week EMA just above there. If we break down below the bottom of the candlestick, that will bring in a massive flood of selling, but we had so many red candles in a row on the weekly chart that should not be a huge surprise.

Gold markets also fell during the week, and much like the British pound and the Euro found plenty of buyers underneath the turn things around and show signs of life. By doing so, it looks like we could be getting ready to bounce a bit. We are near the 50% Fibonacci were to level, so that might have a little bit of psychology attached to it as well. That being said, I would still be very cautious around the $1900 level, so I think this is more or less going to be a short-term opportunity to get long of this market more than anything else.

The WTI Crude Oil market actually got decimated this week, as traders are starting to worry about whether or not there is going to be enough demand. However, the jobs number on Friday was almost triple what was anticipated, the reality is that it may have put the idea in the market that perhaps demand will pick out. The 50-Week EMA sits just below, offering a bit of support. The size of the candlestick is rather impressive, but we are right around in the area that was the original breakout, and of course the pennant that formed previously. In other words, there’s probably some support in this general vicinity.

This has been a wild week for the US dollar against the Canadian dollar, touching the 1.38 region before collapsing again. At this point, it looks like we are stuck in a range, so I anticipate that the market will stay in this 500 PIP range for the foreseeable future. Pay attention to the oil market, because if it does start to rally, that could send this pair a bit lower. That being said, interest rates have a bigger effect on this market than anything else right now, so pay attention to the 10 year yield.

The NASDAQ 100 has been extraordinarily volatile this week, but it did show itself to look likely to continue trying to pick up a bit of momentum. The reversal on Friday was nothing short of stunning, and therefore you have to believe that there’s probably some follow-through coming. The 15,250 level is an area that was important previously, so that might be the short-term target. Underneath, the 14,500 region is awfully supportive, and I think it will remain so. If you squint slightly, you can see on the weekly chart we are forming a bit of a bullish pennant.

The euro fell rather hard to kick off the week, falling all the way down to the ¥155 level. The market then bounced from there, showing signs of life, and ended up forming a massive hammer. A break above the top of the hammer opens up the possibility of a move to the ¥160 level, and a move above that obviously becomes more buy-and-hold. Keep in mind that the interest rate differential continues to work against the Japanese yen, as it has been for some time.

The British pound continues to defend the 1.11 level against the Swiss franc, and as a result, this is a market that looks like it is trying to figure out where to go next, at this point, if we were to break down below the 1.10 level, that would be very negative. On the other hand, if we turn around and take out the 1.12 level, that opens up a move to the 1.15 level. Ultimately, both of these currencies are somewhat weak, so even if you are not trading this market, it might be worth paying attention to this cross pair because it can give you an idea as to where these 2 currencies might go against other ones.