USD/MXN
The US dollar gap lower against the Mexican peso the kickoff the trading week, only to turn around and show signs of strength and fill that gap, only to turn right back around and start selling off. Ultimately, this is a market that I think is doing everything he can to break down below the 16 pesos level, but we have a long way to go. In general, this will be an interesting pair to watch due to the fact that it is an emerging market currency that is extraordinarily important. I think this still remains a market that you are looking to fade rallies in.
EUR/JPY
The euro has rallied rather significantly against the Japanese yen during the trading week, as we have now successively defended the ¥165 level. Ultimately, the market looks as if it is going to attack the ¥170 level, which is a large, round, psychologically significant figure. If we do pull back from here, I suspect that there will be plenty of buyers willing to come in and pick this market up based upon the idea that it will become “an offering of cheap euros.”
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CAC
The French index was very positive this week, although it’s worth noting that Friday was little bit of a letdown. The market has struggled at the previous high, but this simply means that we will probably pull back only to find more buyers. Underneath, we have the €7900 level that is likely to offer quite a bit of support. Even if we were to break down below there, I think there’s even more support near the €7600 level as the 50-Week EMA comes into the picture.
GBP/JPY
The British pound has rallied significantly during the course of the week, much like the euro has against the Japanese yen. All things being equal, we have broken back above the ¥195 level, which is a victory for the bulls. I think at this point in time, anytime this pair pulled back you have to start thinking about the idea of buying dip for value. I have no interest in buying the Japanese yen, as the interest rate differential will continue to be the main driver of all of the Japanese yen denominated currency pairs.
GBP/CHF
The British pound initially rally during the course of the week against the Swiss franc but gave back those gains as we have seen a little bit of weakness. That being said, part of this could have something to do with the fact that 2 of the members of the Monetary Policy Committee voted to cut rates this week. On the other side of the equation, we also have the Swiss National Bank who has already cut rates, so this could be a very volatile pair. However, if we were to break above the 1.15 level, that could send this market much higher. Short-term pullbacks should continue to see plenty of support near the 1.13 level, possibly even down at the 50-Week EMA at the 1.12 level.
EUR/GBP
The euro rallied significantly during the course of the week to break above the 0.86 level. However, just as we had seen in the British Pound against the Swiss franc, there is a little bit of concern that a couple of the MPC members have decided to vote for an interest rate cut. However, the European Central Bank is almost certainly going to be cutting rates in the next month or 2, so I think at this point we still see plenty of pressure to the upside and I think that short-term pullbacks will continue to turn things around and show opportunity to get long yet again.
US Oil
The West Texas intermediate Crude Oil market went back and forth during the course of the week, as it continues to struggle with the idea of breaking above the $80 level. If and when we do, it’s likely that the market could go looking to the $83 level. It’s probably worth noting that the 50% Fibonacci were to level has offered a bit of support, and therefore I think you get a situation where we are going to continue to see a lot of volatility, but I think there are plenty of value hunters out there willing to get involved.
Gold
Gold has rallied rather significantly during the week but on Friday started to show cracks in the armor. All things being equal, I think we continue to see more of a “buy on the dip” behavior, with the $2300 level underneath likely to offer major support. If we can break above the $2400 level, then it’s possible that we could make a move toward the $2500 level above, which is my intermediate target.
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