AUD/USD rose again on Monday as traders took on more risk around the world. The pair has slammed into the 1.05 area, which is an area that once served as support. Because of this, we would assume that it serves as resistance in the near-term. Even with the massive fall last week, the trend is still most definitely up, and we would expect that level to give way eventually. In the meantime, we want to see a pullback in order to go long. The 1.04 could be supportive as well, based upon recent action.
The USD/CAD pair fell fairly hard as oil markets rallied on Monday, pushing demand for the Loonie higher. If should be noted that this is with the trend, and as such – we expected this move. We had told you that the oil markets would hold the key for this pair, and this has proven true. The 0.98 level will be somewhat supportive as all round numbers tend to be, but in reality – this pair going down is natural as it is with the overall trend.
If oil can break above the $90 mark, you can pretty much bet that this pair falls hard in reaction. The 0.9450 level would be inviting as traders know that the situation in this pair is decidedly down. If economic numbers out of the US are good this week, (CPI on Thursday as well as Philly Fed numbers) this could accelerate the down move as traders will certainly buy oil, and then buy the CAD in turn.
NZD/USD had a very quiet day as traders embraced all things risk-related on Monday. This is particularly odd as the Kiwi is considered a massive “risk on” play. The pair has gravitated towards the 0.83 level, even if it is somewhat minor in its importance. The upcoming PPI Input number on Tuesday could move this pair a bit, but in the meantime, we see this as being in a “holding pattern”. If the PPI Input number comes in higher than expected, ( > 1.2%) we could see a surge back to 0.85 in short order. If not, we think this pair wants to meander around the current level.
EUR/USD rose slightly during an uninspired session on Friday. The pair continues to drift within the downward channel, and traders are currently trading as if the market wants to figure out which currency is worse. The current action seems to be “stuck” between the 1.40 and 1.45 areas. Because of this, we are waiting to see a move above 1.45, or a mover below 1.40 in order to buy or sell, depending on the direction.
USD/JPY fell again on Friday as traders attempted to push prices lower, but as with the last several days, found themselves wanting. The BoJ intervened at this level recently, and there are indications that they may be thinking about doing it again. The markets know this, and as such – are not will to push the issue much farther. We see three hammers in a row, there is a good chance that we see a bounce from this area sooner or later.
The GBP/USD rose after first falling on Friday, but fell short of closing above the 1.63 level that previously indentified the bottom of the consolidative action in the market. The market will have to close above 1.63 to be considered worthy of a long, but to be honest we see a lot of sloppiness in the 1.63 to 1.65 range. Because of this, there will be easier and cleaner charts to trade in the near-term.
The USD/CHF pair continued to rise during the Friday session as trader shed the Franc in fears of an eventual peg to the Euro. (This was mentioned as a possibility by some members of the SNB recently.) The truth is that if it were to happen – that would be a while down the road, and sooner or later the market will go back to buying the Franc which served it so well for so long. The pair is currently testing the 0.7750 level, which was minor resistance earlier. If it breaks that area, it will then proceed to 0.8000, and then 0.8300. (Assuming it can continue to rise.) We are still selling this pair, and are waiting for that shooting star or extremely bearish candle to trigger our sell order. Until then, we wait.
The EUR/CHF pair continues to rise as the SNB members suggested that a possible EUR/CHF peg could happen to stem the flow of money into the Franc. The truth is this move is a long way away, and that assumes it actually happens. The pair is decidedly bearish, and we needed this bounce. We are still looking to sell, but as the 1.10 area has been broken, we are looking to see a little more upside and then perhaps some weakness around the 1.15 area. We would sell there on weak candles without hesitation. A break of Friday’s lows gets us selling again as well.
The AUD/USD pair fell, and then rose on Friday as traders took on more risk in the later hours of the session. The recent consolidation area looks like it wants to be supportive of the market, and we feel that we will see the 1.05 level tested fairly soon. Gold is looking like it wants to rise again and that will put in a bid for the Aussie. We buy at a break of the highs on Friday. If it doesn’t break it, we think more consolidation could be in order.
The USD/CAD pair rose again on Friday as the market found the oil contracts to be a bit sluggish. The oil markets are going to control the CAD for the foreseeable future, as it is a major export out of Canada. The markets in oil are starting to look a bit on the weak side, so this could be very bearish for the Loonie. This would bid this pair up, and this could be a trend change that is trying to happen. However, we can only trade what we see, and we do know that the parity level just ahead is very strong resistance, so we are net sellers still, at least until that mark gets closed above on a daily candle. We are looking for weakness about 100 pips above current levels, and then are looking to sell.
The NZD/USD pair fell and then rose on Friday, as the traders stepped in and took on more risk as the day grew older. The pair has been very bullish for quite some time, and it appears that it will continue to be so in to the future. The 0.80 is our line in the sand: If we go lower than the mark, we are not buying anymore. The 0.85 just ahead will probably cause a pullback if we go higher, and that could be your entry point to buy.
The EUR/USD pair is currently banging around in a massive potential flag. Either that, or a downward channel, and at the moment, either could be correct. The pair has been very difficult to trade lately form a long-term perspective, and we don’t think that will change in the next week or two. If we can get a daily close above the 1.45 level – the flag on the chart that is marked with the purple lines would be broken to the upside and valid. If that is the case, we eventually go all the way to 1.65 or so. However, until we get that break, we can only assume we are in a downward channel, but as you can see, this pair has been sloppy over the last few months.
The USD/JPY pair continues to press to the downside as traders are buying up the Yen in massive quantities. However, the 77 level has proven to be supportive because of the Bank of Japan’s recent intervention at that level. We are currently looking very weak at this level, but the market cannot or at least will not break this market down below. With BoJ intervention a serious possibility below this level, we don’t want to sell – but can’t find much joy in the prospect of buying either.
The GBP/USD pair continues its range bound behavior between the 1.65 and 1.60 areas, and we think this will continue. It should be noted we got a nice bounce in the previous week on Thursday, but it still wasn’t enough to break the range. The pair looks like a short-term trader’s market, and longer-term trading will be very difficult until we break below 1.60 or above 1.68.
The USD/CHF pair fell hard this past week, and then bounced as traders left the Franc in droves. There is concern about a potential pegging of the Franc to the Euro, and if that happens….the Franc will be valued much, much lower. However, until that happens there isn’t much to work off of except this casual comment by a SNB member. We are waiting for a selling opportunity, and this potential bounce is about to give it to us. The 0.80 and 0.83 level s are possible selling areas as the trend should be set to continue.
The EUR/CHF pair fell hard in the early days of the week, only to bounce back and form a hammer that is nice and extended. This is a classic buy signal when the highs get broken, and although we are aware of this, we don’t want to buy still. We see the 1.15 area above as massive resistance, and think that any bounce will get stopped cold at that point. Also, there is a Swiss National Bank meeting this week, as well as one for the Federal Reserve. This next week could be rough sailing. By Friday, we should have a much more clear picture.
AUD/USD fell, and then bounced as traders whipped the global markets back and forth this previous week. The AUD/USD shows this in the form of a very long hammer that bounced from the parity level. The pair looks set to push higher, but with the 1.05 level being so resistive (according to the massive support it offered previously) and so close, we are waiting for a daily close above the level before we buy. If it does – we could see a run back to the highs around 1.10 or so. A break below the 1.0000 level gets us very bearish for the long-term.
The USD/CAD pair found itself rising during the week, but failed at the parity level. The pair looks set to fall from the current level, and as such – we could see a nice run for a few handles. The trend is down, and we think that the oil markets are trying to find a bottom. This will be bullish for the CAD as well. Any hint of QE3 from the Fed this week: This pair falls, and falls fast.
NZD/USD fell hard, bounced from the 0.80 level, and then formed a hammer this past week. This shows that the pair is ready to continue its bullish run, and as the Kiwi has been so strong – we are not willing to go against that trend. The pair is a buy if we can break the highs of the previous week, and the Kiwi will without a doubt appreciate. The breaking below 0.80 would be devastating, and we would sell this market aggressively.
USD/JPY had a back and forth day on Thursday as traders tested the lows again, but backed off as fear of intervention certainly must come into play every time we get close to the lows. The 77 level has become a bit of a battleground for bears and bulls in order to determine the future direction of this pair. The trend is down, but with the Bank of Japan willing to jump into the market in order to buy this pair – we are not comfortable selling at these low prices. The buy side doesn’t look all that rosy either. Quite frankly – we are avoiding this pair at this time, but would consider a small position on the buy side if we can break above 77.50 or so.