This week we have a number of important reports coming out. CPI, being one of the key reports coming out. We expect CPI will show more inflationary pressures building. We also have a week full of Fed. speakers. We expect they will try to jawbone the Dollar higher by commenting on inflation. Look for any directional movement that develops this week to be sustained into and possibly through the summer.
EUR/USD:
The Euro has been slow to bounce off of support. We still expect to see the Euro move higher early this week but would be looking to sell into this rally rather than chase after it. We do not expect this pair to move north of 1.56 if it can even get that far. We are happy shorts above 1.5455 – 1.5555 with stops above 1.56, targeting a move back to 1.50 by mid-June.
GBP/USD:
Our longs did finally get stopped out last week. We are however still buying dips. We suspect support below 1.94 will hold and are therefore buying dips near it with stops below the Jan ’08 lows. We are targeting a move back up to at least 1.9750.
USD/CHF:
We sold this pair last week above 1.0555, some of our tight stops just above 1.0613 did get hit but the majority of our position was not stopped out and we did in fact cover just above 1.04. We continue to be sellers of rallies above 1.05 with stops above last week’s highs.
USD/JPY:
This pair did breakdown and retest the lower end of the range we discussed in the last issue. We expect to see this pair trade between 103-106 for some time and are therefore buying dips towards the lower end of the range and selling rallies near the upper end. Do not look for directional bias to come out of this pair anytime soon.
AUD/USD:
We are still holding this pair short from last week and will look to begin to scale out below .9350. We have moved our original stops into .9513 from .9555. We are still selling rallies here looking for a larger pullback to come.
USD/CAD:
We covered our shorts and are now waiting for the next sell signal to come. We expect we will see this pair drift back up to 1.0150 or so, which would be our next short entry signal. Bottom line here is we continue to sell rallies and covering those sells near parity.
