We made it through last week with most of the data coming out in support of the Dollar. At the same time the Dollar has yet to find a bid. So it looks like we will need even more of a catalyst to turn the dollar up. The next major event will Thursday’s ECB rate decision. If they hold rates steady that could in a round about way support the Dollar if the raise rates then look for the Dollar to make new lows. Overall these markets have become very data dependent and this usually happens in near the end of a trend. Keep trailing your stops and be ready for a fast countertrend move.
Europe
Euro, Pound, Swiss Franc
EUR/USD:
The Euro has now tested 145 a number of times and has yet to convincingly break through it. As mentioned in last week’s issue, 145 has been mentioned by Trichet in past statements as a line in the sand. We will now see if the ECB is serious or if they too are only paying lip service, like the US Treasury Department. For the week ahead we have a small short position on with stops above 1.4555.
GBP/USD:
The Cable continues to strengthen but the vertical pace we saw last week looks to have stalled. Look for a pullback below 206 this week and we would lightly buy this dip this week as we do see this pair testing 2.10 before turning back down to test 2.00.
USD/CHF:
Our stops were hit in this pair last week and since then have been on the sidelines. Then trend remains down, keep trailing stops on shorts and be ready for a bounce towards the end of this week.
Asia
Yen, Australian Dollar
USD/JPY:
This pair is still building a bear flag on the daily and weekly charts. We expect more sideways range bound drifting in the near term but longer term we do see this pair pushing back below 112.
AUD/USD:
This pair is also struggling to stay up. We see this pair stalling this week and possibly falling below 90 in the next two weeks. Overall we see consolidation within a new range. We expect that range to be between 89 and 93 for the foreseeable future.
North America
Canadian
USD/CAD:
This trend remains one of the strongest we have seen in years. This pair seems to respond to rallies in crude oil but not pullbacks. If oil pulls back below $90.00 look for this pair to countertrend back up above .9500. If on the other hand oil remains strong and pushes above $100 look for this pair to fall to .9000.
Derek Frey
Odom & Frey Futures & Forex
toll free: 866.636.6378
international 904-247-0232
www.odomandfrey.com
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