Major banks turning very bullish USD

The dollar had a very strong night on Friday, driven by significant month-end flows from US corporates and asset managers. Most of the big-bank research that I’ve read over the weekend is turning very bullish on the USD but I feel that this may be a bit premature. Purely from a trading perspective, whilst the overbought AUD and JPY have undergone major readjustments against the USD, none of the other majors are showing strong trending signals and still seem to be in sideways trading modes.

  • USD/JPY: Undoubtedly still very bullish after the big move off lows near 76.00 last November but it has yet to regain 100.00 and the big macro players are still structurally long of this pair. It may go higher eventually but for me its trading like a pair which will stop out both bulls and bears for weeks, even months to come.
  • The price action in AUD/USD on Friday was very bearish and it remains to be seen whether this was simply related to the month-end flows or whether the recent bear trend has re-established itself. If you really want to be long of USD, this looks like the safest bet, but I will still bet against you 🙂
  • Cable has a double-bottom at 1.5000, a neckline at 1.5155, and retraced to an important 61.8% just below 1.5180 on Friday night. It may go lower, but if you were clever enough to sell near 1.57 then I’d be taking some profits off the table just in case. I’m long but I will stop out at 1.5100.
  • The market is getting gung-ho bearish on EUR/USD, for the umpteenth time, and the EZ story this time isn’t nearly as bad as it has been in the past few years. Sure it may go lower, but this market still screams “range-trade” to me.
  • USD/CHF: This is the one pair which really confuses me as I feel we should be trading closer to parity and that the CHF crosses should be significantly higher. Timing as always is the big issue.

Let’s see what Monday morning brings. Have a great week.

  1. Hi Sean,

    I have AUD long at 0.9165. Do you think I should offload it as soon as possible as seems like all the news around showing it might drop further?….

  2. Hi Sean,

    Regarding the stubborn Swissie, the weekly chart USDCHF is forming a pennant pattern. If I am correct about this pattern, the upper line and the lower line will meet in a few months time around the rate of .95. At this point, the pair would break out the pennant and go up.

    Making sense?

  3. Hi Sean, I remember your great calls earlier this year – bearish cable, bullish USDCHF, bearish AUDUSD, bullish EURAUD followed by the awesome call of 93.5 on USDJPY when it was above 103. So, I believe anybody can follow your next two calls – bullish GBPUSD and bullish AUDUSD. Even if bit delayed, it will happen soon.

  4. Hi Alec, it looks very bearish for sure and the technical picture doesn’t look great. But does depend on your strategy and time-frame. If you are a short-term trader, its prob best to take the small loss and have another try later. If you are more medium-term, then I think these levels in low 90’s are worthwhile dip-buying opportunities.

  5. Thanks Tom, but I do get them wrong as well. I don’t yet have the sense that I’m wrong just yet on these trades but if cable below 151, eurusd below 12850, and audusd below 9000 then I am 100% wrong

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