The week starts today with a rather thin calendar, which will gain momentum in the coming days. The FED meeting is on the agenda on Wednesday. The NFP figures for April on Friday will then close the week. In this environment, the dollar index (=DXY) is forming a bullish flag chart pattern, which could be complemented by an upward breakout in the course of the week. The target of this move would then be the 107.10/35 resistance zone, where it will be decided whether the dollar rally will continue deep into the second quarter. Below the 105 treshold the bullish scenario is over.
EURUSD -- 1.0716
As long as the currency pair trades below the 1.0724 pivot, the bearish scenario is active. Above last week's Friday high (1.0753), however, a test of the 50 ema (1.0804) and the 200-day line (1.0805) is very likely. If the euro breaks above these important average lines, the bearish case is over.
GPBPUSD -- 1.2528
The currency pair reclaimed the important 1.2500 resistance today and has halted the rally below the 200 dma for the time being. I hope you followed our idea from last week to take profit on dollar longs: “The currency pair is slowly reaching oversold territory, which can be used to take profit” (MC #191). Below the 200-day line, there is now another opportunity to sell the pound against the dollar. Depending on the depth of your pockets, the stop must be set above this important average line.
USDJPY -- 155.89
The Bank of Japan apparently intervened this morning after the dollar rose to a high of 160.23. How long the effect of the intervention will last remains to be seen over the course of the week. Some players will certainly try to set up new long dollar carry trades. Just last week, the Japanese central bank kept its key interest rate at 0.10%. With inflation above 2%, there would be scope for rate hikes that could really help the yen in the long term. But the central bankers' concern that their monetary policy house of cards will collapse seems to be greater than the problem of a soft yen.
Nevertheless, I think yen shorts are a risky trade here. It is quite likely that the downward movement is not over yet. In 2022, the intervention was the beginning of a three-month downtrend from 151.95 to 127.22 (-16.28%). I do not think the dollar will lose that much ground against the yen. However, the important support zone of 152/150 could be tested in the short term.
Good luck,
Sebbo