As things stand today, we unfortunately have to interpret last Friday's big red daily candle as a bear trap for the time being. Yesterday, the Dollar Index (=DXY) was finally able to reclaim the 105.50/65 resistance zone. After all, we were not totally unprepared, but the strength of the dollar in the last few days is astonishing: “Nevertheless, false breakouts are part of our business and the risk of a short-term reversal should now be kept in mind” (MC #170)
Obviously, the players want to go into the exciting next week with a firm dollar. Next Tuesday (14nov), the US CPI figures for October will be published, and Friday (17nov) is the deadline to avoid government shutdown. Things are not looking good for dollar bears in the individual currency pairs either, with sterling's weakness standing out in particular. Irrespective of the short-term movements, I stick to my view that the dollar will correct in the medium term. You can read a longer explanation of this here: “US yields and debt rise - Dollar at the tipping point?”
EURUSD -- 1.0687
I would have liked to see the euro move a little higher towards the 200 dma this week for a short attempt. Unfortunately, I missed the entry at the 1.0756 weekly high last Monday. The currency pair is now trading towards a bigger support zone given by the 50 ema (1.0623) and the mid Bollinger band (1.0620). Protagonists who see the euro strengthening again could start a long attempt in the direction of the minor 1.0635 support.
GBPUSD -- 1.2225
Sometimes the simple setups are the solution. The 200-day line was the perfect entry point for a sterling short. Unfortunately, I was so impressed by the big green daily candle last Friday that I didn't do anything. Sterling now looks rather weak below the 50 ema. So far, however, the currency pair is still holding above 1.2200, which together with the mid Bollinger Band (1.2201) forms a minor support zone.
USDJPY -- 151.42
Regular readers know that I am long JPY and it is truly no joke. The carry is kicking in every day and the fear that the 2022 highs will be tested again is becoming reality. Although the probability that the BoJ will intervene increases with every big figure higher, nobody can say whether this will happen at 152, 155 or 160. As long as the dollar does not provide a reason to sell, further price rises must be expected.
Have a nice weekend!
Sebbo