The dollar index chart (DXY) hit 100 this week (100.19 to be exact), its highest level in nearly two years. Largely helped by a ‘hawkish’ (think more aggressive) Fed, the EUR/USD pair in particular saw a strong sell-off. This week’s minutes of the Fed’s (March) meeting showed “many” participants were prepared to raise rates in 50-basis-point increments in coming months. All to-do with fighting the rampant inflation….
I suspect the dollar might find some serious resistance at this level, but if it does manage to break through start looking at the 103 level. What this could mean for dollar pairs in the forex market are pullbacks to ‘better’ entry areas. Remember we are predominantly looking to trade with the trend.
By all accounts the French elections seems to be too close to call and along with the continued war in Ukraine this could be a perfect storm situation for a much weaker Euro.
The markets seem to not like a potential Le Pen (main candidate) presidency and many stakeholders seem to now have already started making precautions.
If you were/are planning to trade a Yen pair, keep an eye out for any news regarding the bank of Japan this week as there are reports that they might intervene to keep rates low in Japan. Have a look at this recent article from Reuters…”Yen falls likely won’t prod BOJ to change policy…”
Forex news this week:
A busy week this week with regards to news, starting on Sunday with the French elections, this could create some serious volatility in the Euro, depending on the result. There is also inflation news from the U.S and U.K, interest rate news from Canada and New Zealand as well as employment news from Australia. The big one, however, are the retail sales figures from the US on Thursday. Higher than expected figures could really see the dollar strengthen.
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EUR/USD: Bias is to short, but I need a better entry zone. I’m looking at 1.1400 on the daily and possibly 1.1050 on the 4Hour. Where it currently is could be interesting for countertrend trades, but I personally wouldn’t go ‘against’ the dollar this week.
USD/CHF: 0.94300 is the key area to keep an eye on. Countertrend setups from this level or a break out of this level for a possible huge move up. If it gets back to 0.92300, I’d look to long.
GBP/USD: I’d like price to retest 1.33800 in order to short.
AUD/USD: I’d start looking for longs on the daily or around 0.7360. My bias is till a stronger AUD due to stronger commodities.
NZD/USD: Stuck between the ema’s at the moment. It needs to make its mind up with either a break up or a break down.
USD/JPY: ‘No man’s land’ at the moment. I’d start looking for longs at 118.500 on the smaller timeframes.
USD/CAD: Big Canadian news this week, so be careful. I’d look to short from around 1.2630
EUR/GBP: Possible short at 0.84700 on the 4hour. 0.86000 is still my main area to look for a short.
GBP/AUD: Far from anything, but look at 1.8100 on the smaller timeframes.
GBP/NZD: Looking to short from 1.9500 based on the weekly.
AUD/CAD: 0.92800 for a long. (Again, be careful, CAD and AUD news this week).
AUD/NZD: 1.0700 for a long.
YENS: Still too far away from anything in order to trade with the trend. Most are in interesting areas for countertrends.
As always, remember correlation!
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