$USD. $USDJPY double top at 118? The $USD was up 9% in around 2 months - $DXY 95 to 103.8. It corrected 2%. Fundamentals remain the same. The US economy is relatively healthy and there is some intent to ease long standing fiscal restraint and constraints. Interest rate rises are logical from zero base. The Bond market was probably overbought due to extensive and prolonged QE and yields should rise further in the medium term. To my mind $USD medium term trend remains firmly up.
Fundamentally EURUSD is going lower. EU Monetary Policy has been given a new leg of QE and is completely divergent from US into a week where a second US rate rise is highly likely and justifiable. Politics and economics both provide a firm downward direction for the rate into the end of 2016 and start of 2017.
However the pair has failed to break lower from 1.046 - 1.053 for a little under two years. The monthly chart indicates a potential triple bottom at 1.05.
While in conflict with the Fundamental view, the rate will be worth watching in the next week from a Technical perspective. Greatest probability is for a 25bp US Fed Funds rate increase and a re-test of the 1.046 March 2015 low in the next two weeks, but given the Technical’s and the potential buy-on-rumour, sell-on-fact market behaviour, that is a deferral or ambiguity to further US rate rise, the pair could bounce. I’m thinking maybe dead cat though if anything.
Positions – Short $EURUSD →2015. Intending – June ↑Short $EURUSD, Short $AUDUSD, Long $USDJPY. Looking - Short $AUDCAD, Long USDSEK, USDNOK on relative economic performance and divergent monetary stance, Long DAX
adt_fx FX Outlook 2015 – General Update – 23 May 2015 No change to forecasts. Opportunities to short $EURUSD in the remainder of the current half year have re-emerged. The same can be said for Long $USDJPY. Other preferred position is Short $AUDUSD...
adt_fx FX Outlook 2015 – General (Weekly) Update – 9 May 2015 Forecasts & Trades Lifted $GBPUSD 2015 target a bit. Otherwise unchanged. Still expect broad $USD strength to prevail H2 2015. I’m Short $EURUSD →2015, and intending through May to ↑Short $EURUSD...