The market has been quiet this week. It usually picks a direction on a Tuesday or Wednesday and activity goes up towards Friday. The forex market is behaving as I expect it would. Here’s my reading of the major pairs:
EURUSD: The 1.28 region has a confluence of several strong supportive features – previous low, moving averages and trendlines. The move down last week was strong, so after a lull or a minor retracement we can expect another attempt to break to the downside. If 1.28 holds again, we can expect a reversal upwards towards 1.30 – 1.32 over the next few days.
GBPUSD: The Cable chart is even more bearish than the Euro chart. 1.4800 / 4850 is strong support from a previous low. I reckon after a minor retracement up to perhaps 1.50, we will see an attempt on 1.48 again and I think cable will break through lower sooner or later. Once 1.48 is broken, we are targeting 1.45 / 1.44 at a minimum over the next week or so.
AUDUSD: This pair again has strong bearish momentum, but is also showing its familiar beach-ball behaviour – it tends to bounce up sharply from the lows. Any retracement towards 0.9180 – 0.9200 is a chance to sell again for an ultimate objective of around 0.85 in a few weeks.
USDJPY: Comfortably bullish, although 101.5 is capping the upwards momentum for now. On this trip to the upside I expect 104 will be broken – we may see 105 soon.
EURJPY: Caught between a weak Euro and a weak yen, this pair will see-saw between 129 and 131, but eventually should break upwards towards 134.
Dollar Index (DXY): As you can surmise from the movements of the constituents of the DXY, the DXY is on a strongly bullish trend in the medium term. The index has broken significant resistance at 84.5 and is eyeing 89 as the next resistance level to the topside. We can’t say if it’s the DXY that is pushing UJ up and EU, GU down, or is it the other way round – it amounts to the same thing.
Remember, this is my chart reading at this moment. When the charts change in a few hours I may toss these views out the window and completely change course. I aim to follow the market, not predict it.
Good luck to all!