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The AUD/USD has broken down significantly during the week as the US dollar has been like a wrecking ball against multiple other currencies. Ultimately, this is a situation where the market looks as if it is trying to go down to the 0.66 level, and if we can break down below there, it’s possible that we could go down to the 0.65 level, possibly even the 0.64 level. On the other hand, if we turn around and rally, it’s not until we break above the 0.68 level that things will look somewhat bullish. Expect more volatility this week.
Silver has also gotten crushed during the week, as the US dollar is like a wrecking ball for this market. The $22 level underneath should offer support, but if we were to break down below there, it opens up the possibility of moving down to the $20 level. On the other hand, if we turn around and rally from here, we could move toward the $23 level above. All things being equal, pay close attention to the US Dollar Index, as the negative correlation probably continues.
The USD/JPY has rallied a bit during the trading week, as we are now well above the ¥142.50 level, and now it looks like it opens up a move to the ¥146.50 level, perhaps even higher than that. Either way, the interest rate differential continues to work against the Japanese yen, so therefore I think you have to look at this through the prism of finding value on dips and taking advantage of it. I have no interest in shorting, and I don’t think that will change anytime soon.
Natural gas markets have initially pulled back just a bit during the trading week, but it looks like we are going to continue to see a lot of noisy behavior, and I do think that longer-term traders are probably starting to put money to work, but ultimately the situation is going to be one of a base building project, as I think more or less what traders are looking at is the potential rise after the summer, as we will almost certainly have demand coming out of Europe to refill tanks as the Russians won’t be supplying them this year either.
The EUR/USD initially tried to rally during the week, but the 1.10 level continues to offer resistance. The 50-Week EMA underneath offers a certain amount of support as it walks along a trendline. The next week may be choppy as we try to sort out whether we will have a risk-on type of situation or a risk-off one. Either way, you will focus on short-term charts more than anything else.
The USD/CAD has been very noisy against the Canadian dollar, ending the week somewhat unchanged. The 200-Week EMA sits just below, and the 1.33 level above previously had been supported. Because of this, I think a certain amount of “market memory” comes into the picture, and therefore capturing the 1.33 level and letting it go above there could be a nice buying signal as we reenter the previous consolidation area. However, if the market were to take out the 200-Week EMA underneath, that would be negative and almost certainly open up the possibility of a move down to the 1.30 level, possibly even the 1.28 level after that.
The NASDAQ 100 pulled back a bit during the week, as the 15,250 level is an area of previous resistance, and if we can break above there, the market could likely go higher, reaching the 17,000 region. On the other hand, if we break down below the bottom of the candlestick, then it’s likely that we could drop down to the 14,600 level. Keep in mind that the market is one it’s a little overbought but bullish. I think a short-term pullback makes more sense than not at this juncture.
The USD/CHF has rallied against the Swiss franc, as we are at a very low level. Ultimately, the market does tend to look at the 0.88 level underneath as massive support, so I would not be surprised at all to see this market eventually rally. This will be especially true if we continue to see a very tight Federal Reserve, which certainly seems to be the case. Yes, the Swiss National Bank recently had an interest rate hike, but the interest rate differential is still huge in favor of the greenback, so I like the idea of buying short-term pullbacks.
