Trade Outlook- The dollar index drip-fed its way lower over the last six weeks moving from 83.30 to 81.50, in a signal that speculative and global institutional interest in holding mid-term Usd positions is waning. This is not the point to be getting long the major currencies, instead, wait for a re-cycle to support and look to buy from there.
Forex Movers- Gbp, Aud, and Cad lead the way lower on the Usd in the last trading session, but only Gbp/Usd was able to break the 4-hour chart range. Look for a move to support at 1.5650 and buy from there. Long-Aud/Usd from a pull-back to 0.9000 and short-Usd/Cad from a long test of 1.0350 are what the patient trader will be looking for.
Forex Shakers- Eur/Usd has consolidated at 1.3000 over the last four days. A long move is favored, but the speculative short-euro positions in the open market will need to be distributed before a test of 1.3250 can happen. Chf and Jpy are gaining on the Usd in sporadic and sometimes violent periods of trade, in falling interest-rate linked moves.
Global Markets- S/P traders will battle the 200-day SMA at 1105 as resistance, while crude oil trade signaled long last week. Short-Usd trade will be aided by +1105 on the S/P and +77.50 on oil.
Eur/Usd- Best moves at 2am and 7am ET. Daily range 140 pips. RSI is Overbought. SMA is @ 1.3000. 12-month 90% correlation to Oil moves. 100-day SMA is at 1.2850 and 1.3550. Slow and steady moves higher will need to test 1.2950 support before 1.3500 is easily seen.
Gbp/Usd- Best moves between 8pm and 7am ET. Daily range 200 pips. RSI is Overbought. 200 SMA is @ 1.5520. 12-month -89% correlation to VIX moves. A long break towards 1.5850 is expected now that 1.5530 held a Weekly close as support. Look to buy support.
Aud/Usd- Best moves between 8pm and 6am ET. Daily trading range is 120 pips. RSI is Long. SMA is @ 0.08950. 12-month 96% correlation to Oil moves. The last main challenge of holding 0.8950 on a Weekly chart close once again allows a potential move to 0.9250. Look to buy support.
Usd/Cad- Best moves after 2am ET. Daily range is 130 pips. RSI is Short. SMA is @ 1.0300 and 1.0400. 12-month 95% correlation to Oil moves. The Daily chart is a mess, with overlapping and choppy trade that cannot break and hold. Favor a short break.
Usd/Chf-Best moves after 3am ET. Daily range 130 pips. RSI is Neutral. SMA is @ 1.0650. 12-month -93% correlation to S&P and Oil moves. Looking for a long reversal off any failed short tests of 1.0400 after a month of daily chart consolidation.
Usd/Jpy- Best moves after 8pm ET. U/J RSI is Neutral. U/J 12-month -69% correlation to Gold moves. E/J and G/J will move hard when U/J finds momentum. A powerful reversal appeared at the 90.00 region. A bearish trend is in place, with 87.70 a pivotal upside area.
Dollar Index- It looks as though investor appetite for the long side of the dollar index is reducing, and that historically high mid-term global risk market inverse correlations may soon be getting tested. The dollar touches every part, of every global market, every day.
It is the unit that central banks rely on as a reserve currency, and is the vehicle used to trade all global commodities on international markets. The index is made up of Euro 58%, Yen 13%, Pound 12%, Canadian 9%, Swedish Kronor 4% and Swiss Franc 4%.
A reversal to 80.00 looks to be in place, with the current 81.50 swing point nedding to see a reversal long before moves lower can then easily happen. Daily trading range is high at 2%.
S&P Futures- The daily transition from Asian, to European, to U.S. trade is where all of the price action is happening. Outside of that, the daily grind to find intra-day fair value is played out. Volatility is increasing again, as is the daily trading range.
S/P futures trade reflects the risk sentiment seen in each of the main global stock markets. Futures trade runs 23 hours a day and reflects what is being priced in regard to fair value in anticipation of the cash market opening in each region. Risk Tolerance = Higher Equities and Lower Usd. Risk Aversion = Lower Equities and Higher Usd.
S/P futures are trading around the critical 1100 swing point. Watch for the Weekly chart hold above that area to trigger 1110-1115 tests, or below to trigger more 1075-1050 tests. Daily trading range is very high at 2.5%.
Crude Oil- The 200-day SMA resistance area sits just under 80.00, and that does look to be a major road-block for crude trade. Crude prices tend to reflect forward sentiment on potential global growth, or not, as the case may be. Levels of forward speculative interest are closely monitored by all professional forex traders. Long-Oil reflects Short-Usd in general, and vice versa.
Resistance at 80.00 may be tested after another move towards the 200-Day SMA at 76.50 failed to break lower. Consolidation around 78.00 is expected in the near-term. Daily trading range is high at 2.5%.
Gold Bullion- The need to hedge the Usd moves has allowed gold trade to stake a claim to be a stand-alone asset class that seems to have few peers when global expansion is in doubt. The GLD/USD correlation is holding strong.
The up-trend on gold is expected to continue, at least until global growth is confirmed. Daily trading range is above average at 2%.