We’ve been getting bored with the USD/JPY pair as they continued to dance sideways with absolutely no passion in the past week, but this morning we saw some juicy up-moves in the pair which not only broke above the Ichimoku cloud, but also the 38% Fibonacci level, and now on its way to reach a previous top at 102.7. The RSI has yet to reach the over-bought zone and we could see the pair dance all the way to our targets set at 103.3 and 105.
Of course, if the pair suddenly decides to go nuts and break below 100, we would change our outlook to bearish with 97 as first alternative target.
The up-moves of US dollar could have got its influence from this morning’s US Gross Domestic Product (GDP) report, which came in better than expected, at 4.0%, as well as the ADP Non-Farm Payroll report which also came out this morning.
Later today, at 12:30 GMT, we will hear the US Federal Open Market Committee’s (FOMC) statement on monetary policy and its interest rate decision. We can sense it here in NYC that Ms. USA (US dollar) is ready for action, and depending on the tone of the members, she can see more up-moves against her counterparts.
How ever, there will be no press conference after the FOMC statement today, so the words themselves will be closely scrutinized. We will then have to wait for the release of the minutes of the meeting, later in the month of August, to find out the mind-set of the various members.
In the meantime the market is looking for the Non-Farm Payrolls report on Friday, to be at or in excess of 230,000 new jobs.
Treasury note yield positive for USD
Dow Jones Newswire has reported that the US 2-year Treasury note auction priced with a yield of 54.4bp on Monday last, the highest seen since May 2011. This is significant, as it indicates that the fixed income market, which takes a middle to long term view, is starting to seriously consider the possibility of interest rate rises stateside.
Any move or indication with regard to lessening the time between now and a rise in US interest rates will have the effect of strengthening the greenback aka Ms. USA. On the other hand, as our economist friends might put it, a disappointment in the numbers expected could lead, at least in the short term, to a sell-off of the US unit.
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Weekly Forex Technical Levels
EUR/USD MT: under pressure
Invest Diva likes: Short positions below 1.37 with targets @ 1.33 & 1.31 in extension.
If pair goes nuts: Above 1.37 look for further upside with 1.378 & 1.4 as targets.
What’s up on the forex dance floor: The validation of a bearish flag pattern calls for further drop.
Supports and resistances:
1.4
1.378
1.37
1.3401 Last
1.33
1.31
1.285
GBP/USD MT: the upside prevails.
Invest Diva likes: Long positions above 1.665 with targets @ 1.74 & 1.79 in extension.
If pair goes nuts: Below 1.665 look for further downside with 1.645 & 1.62 as targets.
What’s up on the forex dance floor: The pair is pulling back on the lower boundary of a bullish channel.
Supports and resistances:
1.847
1.79
1.74
1.6925 Last
1.665
1.645
1.62
USD/CHF MT: bounce.
Invest Diva likes: Long positions above 0.884 with targets @ 0.915 & 0.925 in extension.
If pair goes nuts: Below 0.884 look for further downside with 0.87 & 0.858 as targets.
What’s up on the forex dance floor: The pair has rebounded above its support and remains on the upside.
Supports and resistances:
0.938
0.925
0.915
0.9075 Last
0.884
0.87
0.858
USD/CAD MT: caution.
Invest Diva likes: Short positions below 1.096 with targets @ 1.0615 & 1.044 in extension.
If pair goes nuts: Above 1.096 look for further upside with 1.128 & 1.146 as targets.
What’s up on the forex dance floor: As long as the resistance at 1.096 is not surpassed, the risk of the break below 1.0615 remains high.
Supports and resistances:
1.146
1.128
1.096
1.0864 Last
1.0615
1.044
1.0175
AUD/USD MT: bullish bias above 0.92.
Invest Diva likes: Long positions above 0.92 with targets @ 0.954 & 0.9715 in extension.
If pair goes nuts: Below 0.92 look for further downside with 0.9085 & 0.89 as targets.
What’s up on the forex dance floor: The pair has validated a bullish flag and is currently facing a pull back.
Supports and resistances:
0.997
0.9715
0.954
0.9365 Last
0.92
0.9085
0.89
US Index Daily Outlook
S&P500
Short positions below 1981 with targets @ 1959 & 1955 in extension.
Alternative scenario: Above 1981 look for further upside with 1986 & 1992 as targets.
Dow Jones
Short positions below 17005 with targets @ 16805 & 16725 in extension.
Alternative scenario: Above 17005 look for further upside with 17070 & 17130 as targets.
Nasdaq 100
Short positions below 3992 with targets @ 3928 & 3909 in extension.
Alternative scenario: Above 3992 look for further upside with 4017 & 4043 as targets.
Russell 2000
Short positions below 1149 with targets @ 1123 & 1112 in extension.
Alternative scenario: Above 1149 look for further upside with 1162 & 1176 as targets.
