USD/CAD rose again during the Tuesday session, and the 0.96 handle has been breached again. The pair is still in a massive downtrend, but with all of the debt crisis issues and sovereign risk fears out there, the world is buying USD. It is also selling oil, and that is the biggest problem for the Canadian dollar, not that the Bank of Canada has an issue with a falling Loonie. We still think this pair goes a bit lower, but there is a bounce coming from here. We are looking for bearish action near 0.98 and parity to sell from.
The NZD/USD pair fell hard on Tuesday as traders shunned the “risk on” trade, of which this currency pair is considered to be part of. The pair is still decidedly bullish, but a pullback seems to be in the midst of us now. We look to buy on support, but not until a daily candle shows us this at either the 0.86 or 0.85 levels.
The EUR/USD first rose, then fell during the Monday session. The fact that it has broken below the bottoms of two o hammers suggests that some kind of major support in the 1.4250 area might be getting demolished. If we manage to stay under that level – we feel this pair goes down. The pair is in a downward channel, so we sell rallies in general as the world will certainly begin to focus on European debt worries after the debt limit deal is passed in the US.
The USD/JPY pair had an extremely wild day on Monday as traders weigh the results of a possible debt limit deal along with the idea of a possible Bank of Japan intervention in the FX markets. The day had an extremely wide range, but this is what makes the day such a good signal as a move above the highs or lows would be impressive. If we can break the highs from Monday, we would go long. We wouldn’t sell as it is only a matter of time before we see the BoJ get involved.
The GBP/USD pair fell hard on Monday as traders failed to break above the 1.65 level. This area has been identified by us as a potentially major resistance area, and as such – we were ready. The level will continue to hamper rising rates in this pair. A break of the low on Monday gets us short again. A daily close above 1.65 would be impressive, and could get us long.
The USD/CHF pair fell hard on Monday as the US stock exchanges fell. The pair did manage to bounce however, and as such – is forming a candle that looks somewhat like a hammer. This shows that although there is a significant downtrend in play at this point, there may be some support in the 0.77 area. We are waiting to see a bounce in order to sell this pair.
EUR/CHF absolutely fell apart on Monday as traders piled into the Franc. The pair even came close to challenging the 1.10 mark, which we had suggested it would target recently. (We didn’t however; think that it was going to be in a sudden move like this.) By all measures this pair is oversold – but that hasn’t mattered before, so we are looking for rallies to sell.
The AUD/USD continues to struggle with the idea of the 1.10 handle on Monday, making trading this pair an extremely choppy situation lately. The pair has found support in general, but it simply cannot gain traction at these altitudes. Because of this, we are firm in our commitment to buy the Aussie, but we are waiting to see if there is a pullback first, as we think a retest of 1.08 could be in the cards before it is all said and done.
The USD/CAD had a bullish day on Monday as the oil markets went back and forth. The pair looks like it is trying to bounce, and that would make sense as the market has fallen so hard over the last several months, and the 0.9450 area is such a major area that it was fitting to see another bounce from it. We are presently very neutral when it comes to this pair, but are willing to sell at higher levels such as the 0.98 or parity.
The NZD/USD pair fell on Monday as the world is trying to figure out how to trade around the debt limit situation in America. It should be noted that the stock markets sold off in the US after originally suggesting a gain in the futures markets. Because of this, “risk on” trades like the NZD/USD suffer. We believe it is only a minor setback in the pair, and would be interested in buying, but at lower levels. We are waiting for a cheaper price in which to buy the Kiwi.
The EUR/USD pair fell, and then rose on Friday, as traders really don’t which side of the Atlantic is worse right now. Because of this, the pair will be choppy at best. However, if the markets get a deal out of Congress that it likes in the debt limit discussion, this pair could turn decidedly bearish. We look to sell rallies because we think it is only a matter of time before common sense prevails in DC.
The USD/JPY fell apart on Friday as the US GDP numbers came out poorly, and the Congress is still failing to come to any kind of consensus as to what to do about the debt limit talks. The USD is getting punished all over, and this pair is no exception. It should be noted that it is now trading at the same levels that saw intervention previously. With the Bank of Japan increasing the rhetoric, we are still clear of this trade.
The GBP/USD pair rose again on Friday as lawmakers in the US simply cannot come to an agreement involving the US debt ceiling and national deficit. The longer this continues, the more likely we are to see weakness in the USD. The UK already has austerity measures in place, and as such….is a safer bet at the moment. The 1.65 did hold, so we think upside gains are limited at this point. Choppy conditions are probably the short-term trading conditions.
The USD/CHF pair finally broke through the 0.80 level on Friday, and now begins a new leg down. Because we are in uncharted territory, this pair is likely to have reactions at major round numbers, so expect a slight bounce every one hundred pips or so. The market could also retest the 0.80 level to see if it is now resistance, which would also confirm the next down move.
The EUR/CHF continued its relentless march south on Friday, as traders ran for cover after a bad GDP number out of the USA. The pair is a safe haven, and as such – this pair gets sold in bad times. The Euro has its own problems as well, so it is likely to continue selling off. The pair is a sell on rallies, and we would like to see a bounce towards 1.15 to get short again.
The AUD/USD pair fell on Friday, but bounced to form a hammer just at the 1.10 line. This suggests that the pair has found support at about the 1.09, just as we stated it might yesterday. Because of this, we like buying this pair on a break of the Friday highs.
The USD/CAD spike during the Friday session, and ran all the way up to the 0.96 area, a place that we suggested could turn out to be resistance. The pair did fall from there, but only in later trading. With the oil markets falling, the CAD suffered. The pair looks like it could have a little more in that tank for a move up, but ultimately is a bearish pair, so we will look to sell rallies.
The NZD/USD has reached new all-time highs again on Friday, and the 0.88 handle is now being tested. Because of this, we feel that the pair is overextended, but we certainly wouldn’t sell it. We want to see a pullback in which to buy from. Look for a pullback in order to go long.
The EUR/USD had a very wild week as the pair basically ended up unchanged. The pair has two very unhealthy situations attached to the currencies presently. The bond issues in Europe seem to escalate, and the debt talks in America continue to drag. However, the issues in America are political, and not structural. Because of this, we could see USD strength in the end as the Congress finally gets it together. Until then, this pair will be at the whim and mercy of random headlines.
The USD/JPY pair has fallen hard enough to test the exact point of intervention form the BoJ and 4 other central banks earlier this year. While the technical picture on this chart looks horrible, that very fact about the banks is enough to keep us from selling. If Congress doesn’t come up with something to placate the markets, Monday morning in Asian trading could be brutal, and this pair will get sold off. It is at that point that the BoJ may act. We are very leery of being involved in this pair because of all of the uncertainty at the moment.