Technical Outlook: US Dollar Lower, Gold Higher; Indices Undecided


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Today, we focused on the US dollar – weakness expected to continue. On that, EURUSD should lead into the 113/114s in the near future. Tomorrow, we have the ECB, which could throw a wrench in this view, but the path of least resistance is higher and suggests we won’t see anything which will reverse this trend just yet. But, nevertheless, traders should be on alert for unexpected volatility as per usual. USDJPY broke triple confluence of support and decisively so – targeting the 108 line from April. GBPUSD is still holding onto its bullish structure and support as we head into the UK General Election. Taking a wait-and-see approach on this end, but as long as the current position of cable isn’t damaged it remains constructive and could soon start lighting fire to the US dollar again. AUD and NZD have both joined in on strength versus USD, CAD furthering along it’s rally, too. Commodity currencies are alive and well for the time being.

EURAUD and GBPAUD are both attempting to break support levels which could offer solid ‘old support, new resistance’ trades. USDMXN and USDZAR remain on the sell-list, and have technical structures from which we can operate off of, especially the latter given it’s neat intermediate-term channel.

Gold is trading strongly above the 2011 ‘line-in-the-sand’ trend-line, and with a solid weekly close above by Friday (should it do so) we should see the metal trade up towards the 2016 high. Silver doesn’t have the same clarity, but will follow suit to higher prices if gold is to rally strongly.

Crude oil continues to hold the 47 level on a closing basis, but if it moves below and stays below then the next objective is under 44.

Global indices are kind of a mess. The Nikkei is trying to hold 20k, and needs to do so to maintain the recent breakout. The DAX is trading around the 12700 level, an important one in the near-term. The S&P 500 is backing off a top-side trend-line, but still remains quite constructive – not any great reasons to be a bear there.

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See our quarterly forecasts for FX, equity indices, and commodities to see where our team of analysts see markets heading for the remainder of Q2.

—Written by Paul Robinson, Market Analyst

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