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US Dollar Daily Outlook: Down vs. the JPY, up vs. all others as markets shift from 24 hours ago, from being in clear risk appetite mode to now being in clear risk aversion mode as the bullish effect of the CNY potential revaluation wears off on renewed skepticism about how sincere the Chinese are about revaluing the CNY and in essence sharing their growth with the world.
With the nearly 3- week rally having put most risk assets at around 1 month highs at or near key resistance levels, we now see many interesting entry points for playing the longer term risk aversion trend as it sits at or near major support/resistance points for low risk entries to go long or short, though the longer term bias is clearly to the risk averse trades.
We’ll use USD crosses as examples, though other assets like the S&P 500 index and crude oil are also at major potential turning points.
meaning long USD vs. all except for the JPY, though if the near term risk appetite trend continues these would be good safe entry points to go long risk (long USDJPY, short the USD vs. others) with stop losses on the just the other side of major support for your positions. Here are a few examples to consider on the daily charts for going with the longer term risk aversion trend.
Charts for each of these are presented below at the bottom.
· USDJPY Long: just above key 50% Fibonacci retracement level on the daily chart at 90.65 for low risk entry for a longer term short as the pair is in a longer term downtrend consistent with a bear market), near term target to around 90.
· EURUSD Short: key resistance at 1.2400 has held, making the current level around 1.2325 a good short entry with stop loss just above 1.2400, for target of just above 1.2200-1.2000
· USDCHF Long: currently around 1.1090, just above its 61.8% Fibonacci retracement level at 1.1045, hasn’t been this low since mid April, good safe entry level to go long the USD with stop loss just below the 1.1045 level, target to just before the 76.4% level around 1.1300
· AUDUSD Short: similar to the USDCHF, just above the 61.8% Fibonacci retracement level at 0.8746 for a safe entry point to go short the pair as it breaks below this level, with stop loss just above it and target of about 0.8600
· USDCAD Long: close to key 1.0200 support for good entry with stop loss just below this level and target of just below the 50 day sma resistance at 1.0343
· NZDUSD Short: Currently at 0.7090, just around key 38.2 % Fibonacci retracement level of 0.7087 for a good re-entry to short the pair with little risk, with stop loss just above the 0.7090 level, first target to just above the 50% Fibonacci retracement level at 0.6950
USDJPY DAILY CHART COURTESYOF AVAFX.COM 02jun22
EURUSD WEEKLY CHART COURTESY OF AVAFX.COM 03JUN22
USDCHF DAILY CHART COURTESY AVAFX.COM 04JUN22
AUDUSD DAILY CHART COURTESY AVAFX.COM 05JUN22
USDCAD DAILY CHART COURTESY AVAFX.COM 06JUN22
USDNZD DAILY CHART COURTESY AVAFX.COM
DISCLOSURE AND DISCLAIMER: OPINIONS EXPRESSED ARE NOT NECESSARILY THOSE OF AVAFX, AUTHOR HAS NO POSITIONS IN ABOVE INSTRUMENTS.