Key Levels Met On A Slow Week

Monday was a very quiet day with little by way of news for the market to react to. As such there was a mild continuation of Friday’s themes: A strong Euro, strong Pound a weak Dollar and an even weaker Yen. Tuesday is not much better in terms of data. Draghi is on the wires but having recently had an ECB meeting, the market is up to date on his views so it is unlikely to be too market moving. UK Manufacturing Production is also up although that seems to be the one economic indicator that is not consistently great at the moment out of the UK so it could fall either side of expectations.

USD% Index

The dollar has continued to weaken overall, although now stands at the bottom of a bearish channel at the same time as several other indexes have met significant resistances, so we may see a slight bounce higher from here. Bias remains to the downside with RSI firmly below 50 and below the 100 period moving average. I am bearish USD although we may see a bounce

USD% Index Resistance (EUR/USD support): EUR/USD 1.3733, 1.3723, 1.3700, 1.3692
USD% Index Support (EUR/USD support): EUR/USD 1.3762, 1.3800

EUR% Index

A slow grind higher to squeeze out shorts was seen on Monday and this could possibly continue for most of the week without anything too spectacular happening. Bias remains to the upside, helped by a bullish EUR/GBP, however, we have now met the 100% fib expansion again which was the level that rejected the last attempt higher so we may see some nervous longs taking profit to bring the index lower from a double top ahead of the still unclear FOMC outcome. We will have to see how the market handles this level. I am bullish EUR although there may be some profit taking to bring us lower

EUR% Index Resistance: EUR/USD 1.3791, 1.3761
EUR% Index Support: EUR/USD 1.3677, 1.3600

JPY% Index

The return to strength for the Nikkie (shown at the bottom) is yet to break a fresh high again which means that the JPY% index weakness is currently outpacing Nikkei strength. Bias remains to the downside for the JPY% index but if Nikkei traders begin to take profit after such a long rally, this would weaken USD/JPY and drag all of the other yen pairs lower and cause a relief rally in the JPY% index. The timing of this though could coincide with a dollar relief rally which could see USD/JPY rally regardless, so the current outlook is quite reliant on whether or not the dollar finds it’s feet again.Trend remains bearish JPY but we expect the bounce to continue in the short term

JPY% Index Resistance (USD/JPY Support): USD/JPY
JPY% Index Support (USD/JPY Resistance): USD/JPY

GBP% Index

The GBP% index has also met some interesting levels which could signal some profit taking, with a low time-frame triple top that needs to be defeated before any bullish continuation can occur. EUR/GBP (shown at the bottom) has stalled slightly despite upside being expected but if the pound begins to see some profit taking this could quickly accelerate higher. I am bullish GBP although we may see a further correction lower before a continuation

GBP% Index Resistance: GBP/USD 1.6464, 1.6417
GBP% Index Support: GBP/USD 1.6243, 1.6184

AUD% Index

The Aussie is now approaching the sell zone in a bearish channel which could see some downside from here, particularly if we get a slight recovery from the dollar. The yearly lows are now back in sight and sentiment with regards the Aussie is definitely negative enough to get us there. I am bearish AUD

AUD% Index Resistance: AUD/USD !!! 0.9137 !!!, 0.9190
AUD% Index Support: AUD/USD 0.9067, 0.9033, 0.8971, 0.8928

CHF% Index

Further strength from the Swiss franc has seen the index push past resistance and is now slowly grinding higher again. Above we have the top of a bullish channel to act as a target, although the performance of the Swissy will now be more likely determined by the way in which the EUR% index handles the potential double top. I am bullish CHF

CHF% Index Resistance (USD/CHF support): USD/CHF 0.8785
CHF% Index Support (USD/CHF resistance): USD/CHF 0.8924, 0.8936, 0.9006