The USD bears will need a bit more evidence before getting overly excited but the recent price action in AUD/USD, NZD/USD and USD/CAD certainly suggests that the greenback will struggle on these fronts.
We often get impulsive market moves in September when the traditional holiday season has ended, and I’m definitely still of the opinion that this move will be USD negative. If we are to see a negative reversal in fortunes for the USD then EUR/USD will need to start some sort of a mini recovery and USD/JPY will need to revert to range trading mode. If this happens, then I think we shut our eyes and buy cable and/or sell USD/CAD.
- EUR/USD: Needs to close the gap to 1.3240 and start trading regularly above there. I have no intention of going long EUR/USD, with further ECB easing on the cards, but short squeezes are definitely possible.
- USD/JPY: I see no reason to change my view that we are in a medium-term 100-105 holding pattern. Rallies onto 104 are chances to start building shorts whilst dips onto 101 offer the bulls a chance.
- Cable: Still likely to be the leader of the pack imho. If we can start making some daily closes above 1.6600 then I’ll be more confident that the up-trend is about to re-ignite.
- USD/CAD: Headed much lower in my biased opinion!
- AUD/USD: Care needed still as we are in a sideways pattern between .9200/.9450 but I’m still convinced that this will break higher eventually. NZD/USD movements will depend to a significant extent on what happens in the AUD/NZD cross.