Well it looks as if central bankers got the message that traders were sending them last week. They have stepped up and begun to change the perception of the future of the Dollar. The test now will be if they can perpetuate this change in perception or not. We see this as a “global exhale”. Traders around the world have realized that the sky is not falling…yet. We expect continued volatility in global markets, a firming Dollar and further correction in commodities to be the main themes for the week.
EUR:
The Euro finally turned and we expect to see it fall back under 1.50 this week or next. The ECB will be forced to cut rates in the not too distant future as the global economy slows. Bottom line for us is to simply sell rallies this week.
GBP:
Unlike the Euro, the GBP has the ability to remain firm. We are buyers of dips this week, especially dips below 197.50. We very much expect the old lows near 1.94 to hold and frankly do not even expect those levels to be tested. We expect to see this pair move back up above 2.00 and this time stay above that level.
CHF:
Last week’s V shaped bottom has held and we back above par. If you did buy the 98 or 99 calls that we suggested last week, we advise you to sell at least half of them and hold the rest for a push back towards 1.05 by mid April. Bottom line for us in this pair this week is to buy dips.
JPY:
This pair has managed to pull its way back above 100 and we expect that level to become the new support zone. We are buyers of dips below 100 and expect to see 105 tested by mid April as well.
AUD:
The Ausi has seen a sharp pullback even in the face of a central bank that remains very hawkish. We continue to sell rallies as it matters little what the RBA wants or intends to do or even does. The overriding reality is simply a pullback in commodities. This particular pair, for better or worse, is tied directly to the CRB index. As that falls so to will the Ausi. We expect to see this pair to fall to at least 88 before the next major turn.
CAD:
The Cad had a big rally late last week in the face of the falling CRB index. This pair is second in line as far as the CRB’s influence over it. We continue to be bearish this pair and are now short from 1.0289 with stops above 1.0355. We expect to see parity tested again in the next two weeks.
