The euro has absolutely exploded to the upside during the trading week, threatening the 1.09 level. The size of the candle is rather unsettling, as interest rates in Germany have exploded to the upside, while interest rates in the United States have fallen. That being said, we seem to have reached a bit of a significant barrier in the form of the 1.09 level. I anticipate that this market is likely to fall from here, but I don’t think that it is going to fall significantly, rather there may be some profit-taking during the week.
The British pound initially rallied during the trading week against the Japanese yen, but we have seen a little bit of a pullback. The resulting candlestick is a bit of an inverted hammer, but I don’t read too much into it mainly because we are in the midst of a consolidation range. The ¥190 level seems to be a bit of a magnet for price, and with that being the case I think you’ve got a situation where the market probably continues to go back and forth in short-term trading. Keep in mind that the interest rate differential favors Great Britain, so that is something to pay close attention to here.
Will the US dollar has been all over the place against the Canadian dollar during the previous trading week, and quite frankly I think that will continue to be the case. After all, we are starting to argue about the idea of whether or not tariffs are going to be levied, and of course how bad they are going to be. Furthermore, you also have to keep in mind that both countries released their jobs numbers on Friday, both of which were lighter than anticipated. In other words, it looks like we could be getting a recession and North America, which of course is very negative for Canada as they are almost solely depended on exporting to the United States.
The Australian dollar rallied for the week, but it is worth noting that it is still very much in the middle of its range, and therefore I find it interesting that despite the fact that so many other currencies have been skyrocketing against the US dollar, the Australian dollar looks lackluster. This might be something worth paying attention to, and quite frankly, if you squint just a little bit, you could make an argument for a bit of a bearish flag being formed on the weekly chart as well.
The US dollar has been absolutely obliterated against the Swiss franc, as we have seen a massive change in attitude overall in this pair. By slicing through so many different support levels like we have, this suggests to me that we are in fact going to continue to see problems when it comes to the US dollar, and perhaps even risk appetite. Remember, the Swiss franc is considered to be a “safety currency”, and as a result a lot of people will run to the Swiss franc to protect their wealth. The size of the candlestick does suggest that we are probably going to see rallies sold in.
The German index had another strong week but does seem to be struggling with the area above €23,000. Because of this, I suspect that it is probably only a matter of time before we see traders buying on the dip. The market has a massive amount of support at the €22,500 level, and most certainly at the €20,000 level. However, by yields in Germany are starting to spike again, and that could attract some money away from the stock market and into the bond market. Regardless, we are in a strong uptrend, and I don’t see that changing anytime soon.
The NASDAQ 100 has been pummeled again this week, as it looks like the market is now threatening the 50 Week EMA. It’s worth noting that the market continues to pay close attention to the idea of a recession in the United States, which obviously would have a negative effect on where things go from here. In general, I think we have a scenario where a lot of people are looking to get involved in the market, but quite frankly we just haven’t got a much needed bounce in order to make that happen. The 20,000 level will be paid close attention to. If we continue to fall from here, I would expect a move to the 18,600 level below.
The New Zealand dollar has been very bullish during the week, but it still remains very much in the same range that had been important previously. I would also point out that we gave up some of the gains at the end of the week, which was a bit interesting considering just how weak the US dollar had been. That being said, this is a market that still looks like it is bouncing around between the 0.55 level in the bottom, and the 0.58 level on the top.
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