Recap of last week
More schizophrenic price action from the mighty USD. Although mighty isn’t the favoured description at the moment. EURUSD was lower on the week – not by much and we stayed below 1.0700 which helped bears who at the time felt the squeeze. However 1.0500 will need to be taken out for USD longs to be happy – mainly because the level failed last week.
The French Elections with Marine Le Pen losing ground helped lift this pair and but reversals were never far behind. The same went for CABLE and 1.2550 area stood firm. Remember this level because sellers leant again and should do so in the future.
On Friday Trump never one to avoid the limelight still has the markets trust – just. I say this because on he helped USD pair its losses along with stocks too. I did say USD schizophrenic !
- All eyes on a “phenomenal Tuesday” and if Trump doesn’t deliver expect USDJPY to unwind at least 2 big figures. Congress will love this but the market even more.
- On that note WSJ has a good piece on the decoupling of Stocks and bonds. https://www.wsj.com/amp/articles/bond-market-is-flashing-warning-signal-on-trump-reflation-trade-1488110402 They say it is a warning sign for an equity sell off. I agree.
- Levels on USDJPY 111.60 (38% fib on DAILY and 100DMA) then 107.50 (but i doubt we will get there unless Tuesday goes pear-shaped) see chart below:
- Risk events this week. Trump addresses Congress on Tuesday, EU CPI (core is all i care about) US ISM PMI’s and UK Services PMI
- My focus this week is on a couple of commodity currencies starting with:
- AUDUD .7730 is a rock at the moment and consolidation/mean reversion should continue. We closed on Friday at .7668
- It could not get above and stay above so i would look to sell into the previous level at .7700 but keep an eye on GOLD. See hourly chart below:
- For more long term i see .7520 as a very nice buying/target level. SEE DAILY CHART
- NZDUSD and also consolidation with a very nice buying opportunity at .7140 and selling at .7250
That’s it from AP towers but keep an eye out on Linkedin as we will be posting comments throughout the week.
Enjoy and discuss
Adam and Patrick