Another week and another nail for the dollar. But before we get too excited it must be pointed out that dollar selling wasn’t across the board – at least not until NFP. During the week dollar selling was persistent against EUR, CHF & JPY but not against the ‘riskier’ currencies AUD, CAD & GBP. That sort of action clearly implies risk-off sentiment and that USD isn’t considered to be one of the safe havens anymore. Although Europe and Japan have their issues to ensure volatility in their respective pairs, Switzerland suffers no such dramas which is probably why the Franc is at all-time highs and gaining.
Below are 6hr charts which I find great for identifying short and intermediate term trends to guide me for the week ahead.
This pair is true testament to the power of the trend and the powerlessness of authorities to reverse the trend. Weekly, Daily or this 6hr, the chart speaks for itself. I love trading this pair.
[right click on charts to open in new tabs]
Japan may not like this chart inching down again. Even with the help of other central banks it can only produce temporary reversals.
The short term trend for the Euro is clearly UP helping keep the medium term trend UP. Buying daily pull-backs would seem to be the sensible trade now. Should sovereign debt drama reveal itself again then the preferred Euro short would be v. CHF
The aussie has been range bound the past week failing at mid-107 level several times but being supported at 106. Keep watch.
The pound was the weakest of the majors during the week falling across the board but received a boost after NFP. This would be the pair to short should the dollar fight back.
Despite domestic data being good, CAD has been in downtrend against USD for the past month and didn’t really fire up after NFP. Being an immediate neighbour puts Canada at increased exposure to USA’s economic woes. But it has found some support at 0.98.
My trading plan for the week would be to sit back and allow 24-36hrs for Friday’s moves to be absorbed before attacking these charts again. $:))