Looking at the week ahead, let’s start with the Euro. We mentioned last week that Euro Dollar was wrapped up in cross pairs and not driving the market. This was still apparent this past week, however were closer to potentially seeing EUR/USD break to the downside. EUR/USD traded within a range last week and closed just shy of the 1.1230 level. This is a pivotal area which requires a weekly close below to begin seeing the downside momentum again for the Euro.
Look for initial dynamic resistance near 1.1275/85 and dynamic support near 1.1180/70.
Sterling, GBP/USD, gave us the stretch to the upside we were looking for last week. It traded beyond 1.3340 and up to 1.3370 before retracing lower. In the process we have a daily setup bar which is pending and if we get a daily close below 1.3225, should limit any rallies for the time being. When comparing GBP/USD against EUR/USD and wrapping EUR/GBP into the mix, we actually see a lower bias for all three. EUR/GBP confirmed a top with Friday’s close at .8485 and should continue to slip further. We believe this will be driven from the EUR/USD and look for closes as mentioned above.
Look for initial dynamic resistance near 1.3270/80 and dynamic support near 1.3200
Dollar Swiss, USD/CHF traded sideways last week and could not close above .9268 which would confirm a short term bottom. While we are still leaning towards higher price action, it may not be as quick as we initially expected as selling pressure in EUR/CHF, GBP/CHF and AUD/CHF may limit the rally. If we are to see this pair higher, it will have to refrain from a daily close below .9230 and to gain momentum upwards, requires a close above .9250.
Look for initial dynamic resistance near .9300/10 and dynamic support near .9135/25.
Dollar Yen, USD/JPY, had a daily close above 113.90 last week to confirm a short term bottom and held the dynamic support area at 113.15. Even with EUR/JPY in a downtrend both on a daily and weekly perspective, USD/JPY should manage to grind it’s way higher, albeit at a slower pace. This pair resembles USD/CHF with respect to the cross pairs limiting the upside and to hold it’s bid tone, will have to maintain daily closes above 113.55.
Look for initial dynamic resistance near 114.40/50 and dynamic support near 113.10/00.
Dollar Canada, USD/CAD, reversed course from last week and had a strong showing, making a new weekly high at 1.2935. This completely flipped the daily charts, which last week closed below the prior low, only to now close back above the prior high. We cautioned last week to wait to see a lower confirmed high on the daily charts before getting excited about further downside price action. This never came to pass along with the weekly closes never transpiring. This is the primary reason our methodology always waits for confirmations and never rushes to enter a market before it’s time.
Look for initial dynamic resistance near 1.2955/65 and dynamic support near 1.2820/10.
Aussie Dollar, AUD/USD is leaning more towards downward price action from a weekly perspective. As we mentioned last week, the monthly chart will be a catalyst for this pair. We are paying attention to the monthly close for Aussie Dollar and anything below .7105 will add higher probability to lower trading in the longer term.
Look for initial dynamic resistance near .7165/75 and dynamic support near .7085/75.
Kiwi, NZD/USD, still has a downward bias. Not much has changed from last week and the short and intermediate trends still point lower.
Look for initial dynamic resistance near .6790/00 and dynamic support near .6670/60.