Talking Points- EUR/USD falls to lowest level in over 3-months
- Gold breaks key support level
- Cyclical analysis points to a reversal in the days ahead
Foreign Exchange Price & Time at a Glance
Price & Time Analysis: EUR/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- EUR/USD touched its lowest level since early February on Wednesday
- Our near-term trend bias remains lower in EUR/USD while under 1.3710
- Interim support is eyed around 1.3590 ahead of a major downside attraction between 1.3520/50
- A medium-term cycle turn window is seen at the end of the week/early next week
- Only strength through 1.3710 would sugggest the euro has bottomed ahaed of schedule
EUR/USD Strategy: Like the short side while below 1.3710, but looking to exit short positions by the end of the week.
Instrument | Support 2 | Support 1 | Spot | Resistance 1 | Resistance 2 |
EUR/USD | *1.3550 | 1.3585 | 1.3610 | 1.3640 | *1.3710 |
Price & Time Analysis: Gold
Charts Created using Marketscope – Prepared by Kristian Kerr
- XAU/USD fell sharply again on an option expiration day
- The move below the late April cycle low has shifted our near-term trend bias negative
- The 61.8% retracement of the December to March advance at 1260 is now an important downside pivot with weakness under this level needed to confirm that a more serious decline is really underway
- A minor cycle turn window is seen here, but the middle of next month looks like the next major turn window in the yellow metal
- A move back through 1286 would shift immediate attention higher
XAU/USD Strategy: Flat.
Instrument | Support 2 | Support 1 | Spot | Resistance 1 | Resistance 2 |
XAU/USD | 1248 | *1260 | 1265 | *1287 | 1300 |
Focus Chart of the Day: FXCM DOLLAR INDEX
About a month ago we were looking for a strong rally in USD. At the time we were in very limited company as the fundamental background supposedly didn’t warrant a strong dollar. My how things have changed over the past few weeks! We were mostly focused on the euro, but even formerly unstoppable high fliers like Cable and NZD/USD have turned during this positive dollar period. In the broader scheme of things we like the dollar - especially over the second half of the year. In the near-term, however, we think the USD’s rise is getting a bit long in the tooth and will be limited to a few more days (a full week at best) as an important cycle turn window is eyed late this week/early next week. We will leave it to the fundamental guys to pinpoint the “reason” for this shift in sentiment, but from this corner month-end rebalancing shenanigans or a disappointment from the ECB look like clear candidates. We are unsure just how important this USD decline will be, but it would be surprising if it didn’t last at least a couple of weeks. Only new cycle highs in the FXCM Dollar Index after Thursday of next week would completely invalidate our early June negative USD view.
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com