Please note, that this article comes from my archive. Check the actual date in the header.
With the Mayweather-McGregor fight behind us, the greenback is now the one on the ropes. Soon it will be bracing for a stiff uppercut in this Friday’s Non-Farm Payroll job report which falls on the first day of September.
The Dollar Index fell 0.82% on Friday after USD bulls were disappointed by Yellen’s brief speech at Jackson Hole with no insight into upcoming monetary policy. The US dollar index versus six major currencies is lower around 10% this year. As of today, the market’s expectations of one more rate hike from Fed this year fell to lower than 40%. This should not come as a surprise as the FED had a growing credibility problem stemming from overzealous revelations on expectations on interest rates BOTH in 2015 and 2016. Now USD bears have their fangs out (no pun intended). And ready to capitalize they rightlly should be.
Last week trading was boring due to the thin vacation market. We expect the same quiet trading this week as well. What currency could be gainer in such an environment where the world’s reserve currency is heading lower? Euro. With monetary policy disappointment and huge political concerns from U.S., European market seem to be attractive for investors to pay attention to. European economy is picking up the momentum and the market participants discuss possibility of tightening monetary policy from ECB as the only option for the nearest future. EURUSD closed last week at 1.1926 (+1.55%), highest level in 31 months. Traders and investors are bullish on Euro two weeks before next ECB meeting, which expected to be a start of hawkish actions from Draghi & Co.
You can find here a squeezed weekly chart of EURUSD starting from early 2000yy: 
A bearish MACD divergence could be formed. RSI is in overbought territory. But we’ve EUR seen so many times ignoring technicals especially in such fundamental environment.
Next target to test is the green median line. The range for next couple weeks could be 1.2180/2225. EURUSD can continue the strengthening up to the red resistance line from year 2008.
Local supports are 1.1680 and 1.1750, but we do not expect for such a gift from the market. Next two weeks will be decisive for EURUSD fall trend.
We observe good gains in Euro crosses with such a strength of EURUSD. One of the most gainers last week was EURNZD, rising almost 400 pips (+2.45%). It was not big surprise for us especially after verbal intervention from RBNZ couple weeks ago. Seems like they will continue to fight against strong kiwi.
There are obvious intraday supports for buy dips strategy. These are H4 charts of EURUSD, NZDUSD and EURNZD together:
EURGBP is on it’s way to the parity amid Brexit uncertainty and its’ impact on British economy. The sterling struggles to have a solid upside momentum despite weak USD. It’s rather unusual to observe the pound trading in a very tight range, but it seems to be a new reality for the currency.
Canadian Dollar is among gainers last week, while other commodity currencies (aussie and kiwi) struggled to strengthen. USDCAD closed the week lower than 1.2500, opening the road to local support around 1.2415. Talking about possible targets for USDCAD, we should see an interesting technical picture on USDCAD monthly chart.
We made a simple median trend line (green dotted on the chart below), connecting lows in October 2007 and lows in April 2010, highs in September 2011 and highs in January 2014. This line has been breached in December 2014, which caused a strong uptrend and a huge bullish candle in January 2015. We suggest that it’s time for the prices to come back to this line (1.2161/2216) in the next couple months, if not breaking it lower, down to Ichimoku cloud support in the range of 1.1950/2000. Canadian GDP next week has rather low expectations, leaving a room for an upside surprise.
Safe havens like GOLD and Yen are consolidating around important resistance levels. It’s rather hard for them to continue upside momentum due to the lack of volume in such a thin trading conditions. But we could see a further breakout of 1300.00 - 1305.00 for GOLD and 108.60 - 108.80 for USDJPY.
Next week economic calendar has important data from Eurozone to confirm strong fundamentals, US NFP and Consumer Confidence. It would be very interesting to watch Trump’s speech about tax reform, which is scheduled for Wednesday.
Please note, that this article comes from my archive. Check the actual date in the header.
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