This week we have another round of data points coming out. We have GDP on Thursday and then the all important NFP report on Friday. We expect the Dollar to continue to stage a bounce and we are overall buyers of dips in the Dollar against the majors. Now that oil has backed off of its highs the central bankers have the “excuse” they need to justify sitting on their hands. This lack of action on the part of the Central Banks leaves the currencies as a whole to drift in a very choppy fashion. This is a true “traders market” and one that is likely to last for the balance of the year as we see little on the horizon that would force the hand of one of these Central Banks.
EUR/USD:
Much like last week, we are again selling rallies in this pair. There is little to no reason to expect this pair to follow through above 1.60 in the near term so we continue to be sellers of strength. Again we are not predicting overall direction, what we are predicting is a lack of direction or range bound market that we have already seen since the beginning of the second quarter, continue to maintain itself for the foreseeable future and since we are still closer to the top of the range than the bottom we remain short biased.
GBP/USD:
This pair also remains the same as last week. We are sellers of rallies especially anytime this pair trades above 2.00. We are still targeting a move to at least 1.9750 and possibly lower before this current “trend” reverses. This market is also range bound much like its cousin the Euro. And here to the BOE is unlikely to do anything for some time. Central Bankers as a whole are acting like a deer in the headlights, that is to say that they are paralyzed by fear and frankly we think rightly so.
USD/CHF:
This pair did consolidate last week as we expected and told readers in the last issue. We are now patiently looking for a large dip to buy into. We expect this pair to rally above 1.05 later this summer.
USD/JPY:
This pair consolidated just under the 108 handle last week. We see this as storage of energy ahead of the impending breakout to the upside. We continue to be buyers of dips in the low 107’s targeting a move to at least 112 by summers end.
AUD/USD:
This pair has now slid to test major daily trend line support near the .9550 level. We expect some kind of reactionary bounce off of that support level but will again look to sell into that bounce as we still see this pair moving lower in concert with falling commodities and a rising US Dollar.
USD/CAD:
This pair has now run back up to the upper edge of its range. It has traded this range all year and here too we have little evidence of a catalyst that would break us out of this range. We are therefore selling rallies above 1.02 with stops above 1.03 if those stops are hit we will short again above 1.03 with stops above 1.0389. All the while we are targeting a move back to parity.
