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EUR/USD has moved back and forth throughout the week as we continue to search for some clarity. Both central banks are likely to raise interest rates fairly soon, so you will continue to see a lot of consolidation in this pair. As things stand now, the 1.10 level above is significant resistance, while the 1.08 level below is support. The 50-week EMA and trendline have settled just below this 1.08 level, so you are likely to continue to see a lot of short-term back-and-forth trading, allowing range-bound traders to take advantage of the small move.
GBP/USD looked very much like the Euro during the week as we tried to figure out which way to go next. It’s probably worth noting that all the more acutely when it pulled back on Friday to show significant support at the previous resistance barrier. So the market looks like it has found a value hunter, but we have the 200 week EMA above offering selling pressure. In other words, I think it will be a lot like the EUR/USD pair, which is a market that is probably stuck in some type of tight consolidation. This makes a lot of sense as we sit between the 200 week EMA above and the 50 week EMA below.
The US dollar moved back and forth during the trading week to reach the 1.33 level at the top. The 1.33 level used to be support and is now significant resistance. Similar to the Euro and British Pound, we are moving between the 50-week EMA and the 200-week EMA indicator, so it is likely that we continue to see choppy and noisy behavior. With that being said, I think this is ultimately a market trying to sort itself out, maybe waiting for us to break out of one of those moving averages will tell you which way to trade for more movement.
The US dollar continued to strengthen against the Japanese yen during the week as the interest rate differential between the two central banks remains very wide. However, on Friday, there started to be a slight decline, and ultimately I think that’s probably something that’s needed at this point. I will be paying close attention to the ¥142.50 level, an area where I expect significant support. I am not interested in selling this market and I think we will eventually reach the ¥146.55 level, maybe even the ¥148 level.
The Australian dollar has been quite erratic over the past few weeks, but at the end of last week we saw support at the 0.66 level. It looks like we may be trying to stabilize within the previous consolidation area, which means the 0.66 level should be support, while the 0.68 level should be resistance. If we were to break below the 0.66 level, then this opens up the possibility of a decline to the 0.65 level. It then targets the 0.64 level. Alternatively, if we break above the 0.68 level, that means we could go to the 0.69 level, maybe even the 0.70 level.
The British pound strengthened slightly against the Japanese yen during the trading week. As long as the Bank of Japan remains extremely loose with its monetary policy, we will continue to see traders jump into this market looking to take advantage of the “cheap British Pound”. Given this, the market is likely to see a lot of traders willing to jump into this market every time it pulls back, and I see the ¥180 level below that as a major support level. On the other hand, if we manage to break above the ¥185 level, then the market could really start to pick up again, but it’s a bit overdone at this point.
The Euro has moved back and forth against the British Pound during the week as we continue to trade between the 0.85 low and the 0.87 level above. The 200-week EMA is just above, the 50-week EMA is in the same area. If we were to break below the 0.85 level, then we are likely to fall to the 0.83 level. On the other hand, if we were to turn around and move the 0.87 level up, then that would allow you to move to the 0.89 level.
The US dollar continues to strengthen slightly against the Swiss franc over the past week, with the 0.90 level above offering significant resistance. At this point, the market would break higher, then it could try to reach the 0.91 level at this point. On the downside, I believe the 0.88 level continues to offer massive support.