In his weekly strategy outlook on DailyFX.com, quantitative strategist David Rodriguez says "the US Dollar stands to lose further versus the Euro, British Pound, and Australian Dollar".
GOLD TECHNICAL ANALYSIS – Prices paused to digest gains after touching the highest level in three months.
Past performance is not necessarily indicative of future results.
A break above the 76.4% Fibonacci expansion at 1231.71 exposes the 100% level at 1250.96. Alternatively, a turn below the 61.8% Fib at 1219.80 targets the 50% expansion at 1210.18.
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S&P 500 TECHNICAL ANALYSIS – Prices broke above range resistance, setting a new record high.
Past performance is not necessarily indicative of future results.
From here, a daily close above the 50% Fibonacci expansion at 2140.70 exposes the 61.8% level at 2159.30. Alternatively, a move back below the 38.2% Fib at 2122.10 targets the 23.6% expansion at 2099.10.
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Source: The Cross-Market Technical Update by Ilya Spivak on DailyFX.com
Fears of a "Greece-like fiasco" in Spain after Election Upset
The Euro underperformed in overnight trade, falling as much as 0.2 percent on average against its leading counterparts. The selloff followed the emergence of results from Spanish local and regional elections. Exit polls suggested the establishment PP and Socialist parties took just 53 percent of the vote compared with 65 percent in 2011.
Past performance is not necessarily indicative of future results.
DailyFX currency strategist Ilya Spivak said in a note that the outcome of the Spanish elections has underscored a growing influence from Podemos, "an antiausterity party in the mold of Greece’s now-ruling Syriza."
US Dollar Tumbles, but Support Likely to Hold Back Further Declines
The Euro recently bounced off of important volume-based support versus the US Dollar near the $1.0850 mark, and a continued hold above leaves focus on near-term resistance starting at $1.1200.
EUR/USD
Total Buy Volume Executed, Total Sell Volume Executed, Net Volume Executed (Buy-Sell)
Length of bar indicates the sum of Buy and Sell volume
Past performance is not necessarily indicative of future results.
Chart source: Prepared by David Rodriguez, Data source: Directional Real Volume Indicator from FXCMapps.com
Forex Trader Sentiment Favors buying Euro, Selling US Dollar
Our retail forex trader data shows many have bought aggressively into the US Dollar pullback. We view this as contrarian signal the Euro may continue higher.
Past performance is not necessarily indicative of future results.
See specific currency pair forecasts on DailyFX.com
Here's the latest Speculative Sentiment Index (SSI) reading from DailyFXplus.com:
The ratio of long to short positions in the EURJPY stands at -1.51 as 40% of traders are long.
Past performance is not necessarily indicative of future results.
We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are short gives signal that the EUR/JPY may continue higher.
US Dollar Stands at the Cusp of its Next Major Move
- Dow Jones FXCM Dollar Index (ticker: USDOLLAR) stands at the cusp of an important move
- Japanese Yen remains a sell until this changes
- Our focus remains on our volatility-friendly Breakout2 trading strategy from DailyFXplus.com
Global Yields Are Rising, But Is It a Sign of Growth or Risk Appetite?
Talking Points:
• Global government bond yields have marked a significant rebound (bond prices have declined)
• For benchmark 10-year US Treasury and UK Gilt yields, we could attribute this to rate speculation
• However, European, Japanese and Chinese yields (QE laden) suggests something else is being signaled
One-sided retail forex sentiment points to continued Euro gains versus the US Dollar, while the New Zealand and Australian Dollars are likely to fall further.
Past performance is not necessarily indicative of future results.
See the Speculative Sentiment Index (SSI) and other reports by quantitative strategist David Rodriguez on DailyFX.com
Greek Debt Negotiations Enter the 11th Hour, Euro Risks Loom Large
Fears of a Grexit are growing as the politicians continue their hardline negotiations. On top of that, we have the FOMC rate decision coming. Between these two events, there is plenty of event risk for the EUR/USD over the next few days which DailyFX head forex trading instructor Jeremy Wagner discusses in today's video.
Trading the News: Federal Open Market Committee (FOMC) Interest Rate Decision
The updated forecasts coming out of the Federal Open Market Committee (FOMC) meeting may generate a bullish reaction in the greenback and spur downside pressures for EUR/USD should the central bank show a greater disposition to remove the zero-interest rate policy (ZIRP) in 2015.
What’s Expected:
Expectations: Bullish Argument/Scenario
Past performance is not necessarily indicative of future results.
The Fed may continue to highlight an upbeat outlook for the U.S. economy as the central bank anticipates a stronger recovery to emerge in the second-half of the year, and the fresh forecasts may help the greenback resume the bullish trend from earlier this year should the dot-plot remain centered around 0.50% to 0.75% for 2015.
Risk: Bearish Argument/Scenario
Past performance is not necessarily indicative of future results.
Nevertheless, we may see a growing number of Fed officials show a greater willingness to retain the ZIRP for an extended period of time, and the central bank may sound more dovish this time around as the ongoing slack in the real economy limits the committee’s scope to achieve the 2% inflation target over the policy horizon.
The COT (Commitments of Traders) Index is the difference between net speculative positioning and net commercial positioning measured. The latest data show extreme positioning in the Japanese yen as well as positioning in the Swiss franc and Mexican peso that is close to extremes.
Past performance is not necessarily indicative of future results.
Use of the index is covered by senior technical strategist Jamie Saettele is his article on DailyFX.com
