Currency Technical Outlook for the Week

Currency Technical Outlook for the Week

USD is walking a tightrope…

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 The Greenback has had a nice prolonged show of strength the past couple of months.  This week the market is set to put the USD to the test.  USDCHF and USDCAD have held a strong vertical slope higher.  Both currencies are riding the lower Support line that has channeled them higher.  USDJPY market price action has started to lay out a Head and Shoulders pattern indicating a potential turn from the rally.   The AUDUSD is basing after a strong Bearish Selloff.  Thus a perfect storm is brewing for a USD setback so let us break down the menu.

The USDCHF and USDCAD have both touched off of strong Support that has been channeling these currencies higher.  These two markets are balancing on Key Pivot points. The 0.9961 is the level for the USDCHF.   Above here trading is expected to build as the Bulls potentially could lift the market towards the 1.0017 Resistance level and would not expect much beyond that.  Below 0.9961 the Bears will have their sights on pressing Support to new move Lows. Would expect the 0.9873 to be a potential target to the downside for any short-term selloff.  In tandem is the USDCAD.  Trading above 1.2675 keeps the Bulls poised to press Resistance.  If the market trades above here it is likely that the Bulls will make a play for 1.2802.  Under 1.2675 all bets are off as the Bears confirm a short-term change in trend. The 1.2537 level is the medium term downside sell off objective and the 1.2466 is the longer term extended Bearish target.

 USDJPY is forming a Head and Shoulders formation which project the 114.000 level short-term target to the upside.  If the market is going to maintain a Bullish posture this is the possible hurdle to cross. The 113.182 level is the baseline for holding Support in check.  Use caution below here.  Trading that is sustained at these lower levels are expected to build.  Conversely, 113.094 will be the last line of Support.  Any failure here is a Bearish sign that this currency is ready to press a new wave lower.  The 112.300 level is the longer term sell-off target.

To top it off the AUDUSD is drifting in a basing range trade.  This one is a tuff one.  For now, it is a sideways choppy range trade.  The bias is ready for a bounce that will give the Bulls a shot.  The key to this currency is watching the other big currency crosses this week.  Downward moves in USDCHF, USDCAD and USDJPY will most likely give the Bulls in the AUDUSD market a reason to make a run for higher levels.

 If this is not enough, the EURUSD is showing signs of strength with the 1.1553 level having a solid Support level for this market and it is expected to hold for the short run.  Current momentum is potentially targeting the 1.1682 level and would expect some struggling here.  This is a critical area.  A turn off of this Resistance level is likely at first.  Trading above here is a momentum builder though and would expect further upside action as the USD falls apart in the short run. The 1.1759 is the Resistance level that the Bulls will be seeking before a pause.  Trading under 1.1553, on the other hand, puts this currency back on edge as it takes this market on a trip down into the gutter.  Use caution as you may not want to fight a move into this territory.  More downside action is maybe likely.  The next wave lower targets the 1.1450 Support level.

 As a whole, the USD is set to feel some tension from the major currency cross rates.  Only strong actions from North Korea could upset the perfect storm brewing.  In this case, the USD would most likely see Support in the USDJPY trade and the pressure may subside in the other major currencies as well.  Economic releases this week are not expected to throw the USD into a tailspin or give the Dollar any real Support.  This week it looks like the market is set for more of a technical trade than a fundamental one.

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