Note that this is my current view, but if market conditions change my view can change too. Generally I will trade in alignment with what I have noted here, though I will wait for a set-up before I enter. I base my view on technical and fundamental information. This is my beliefs and you are welcome to have opposite ones. Having a plan is more important than the actual direction for me.
- Wait DXY – MT is sideways normal. The main event last week was the FOMC meeting. The outcome was somewhat dovish, with Janet Yellen clearly reluctant to hike rates, even if some of her colleagues do (three members voted to hike rates this month). It is going to be difficult or Yellen to find consensus in coming months. This should mean further uncertainty leading up to the December meeting. This uncertainty will be exaggerated with the US election in early November. For now I expect the USD to remain relatively range-bound with a focus on US economic data, in particular NFP. Positions traders should look to take profit relatively quickly in this environment as trends are likely to be limited.
- Sell GBP/USD. – MT is bear normal. The pound continues to struggle in the face of Brexit fears. The GBPUSD has been ignoring positive data and a dovish Fed and we can expect the sell-off to continue down to 1.28.
- Wait USD/JPY. – MT is sideways normal. It was a fun (or not!) week for USDJPY traders with both the Fed and BOJ announcements. The BOJ made some minor changes to it’s policy, but traders expected more and USDJPY sold-off, coming perilously close to the key 100 level. We can expect this level to be tested again shortly, which should be a buying opportunity in the current market type (wait for a reversal pattern to initiate longs). A clear break of 100 could open the door for a move down to .96 if the BOJ continues to be reluctant to step up it’s game and engage in more aggressive QE.
- Wait AUD/USD. – MT is sideways volatile. The AUD was helped by a neutral tone from the RBA meeting minutes. Iron ore, copper, gold and stocks all bounced , which are all supportive of a stronger AUD. Given these factors, and the yield available on the AUD, we can expect renewed demand for the currency. The better opportunities are perhaps on the crosses.
- Wait EUR/USD. – MT is sideways normal. While there are a variety of macro and political risks in the EU at the moment, the market does not want to focus on them. Instead the EURUSD remains supported on the back of strengthening economic data and a less-dovish ECB (hard to say when rates are negative but true!!) and a dithering Fed. Wait for now.
- Wait NZD/USD. – MT is sideways normal. The kiwi sold-off last week with the RBNZ reiterating it’s dovish stance and expressing it’s discontent with the high currency. I don’t expect the sell-off to last for too long, though if we head back towards .70 it should not be a surprise. Overall, I remain bullish the pair fundamentally and see it as a buy once a base is found.
- Wait USD/CHF. – MT is sideways normal. The CHF is strengthening across the board. This is despite the SNB’s smoothing operations on the EURCHF. Look to buy CHF on the crosses ( I like short CADCHF and GBPCHF) .
- Wait USD/CAD. – MT is sideways normal. We have poor Canadian data along with an oil price that remains under pressure. I like to buy USDCAD in anticipation of a breakout, but take some profit quickly in this current market environment.
- Buy EUR/GBP. Trend – MT is bull normal. Look for the pair to continue to head higher on the back of ongoing Brexit concerns. Buy.
- Wait EUR/CHF. – MT is sideways normal. Wait.
- Wait AUD/JPY. – MT is sideways normal. Still an opportunity to stalk a buy around these levels I believe. So long as sentiment is risk-on.
- Wait NZD/JPY. – MT is bear normal. Wait.
- Wait GBP/JPY. – MT is sideways normal. Wait.
- Wait EUR/JPY. – MT is sideways normal. Wait.
- Sell CAD/JPY. Trend – MT is bear normal. Look to sell.
- Wait CHF/JPY. – MT is sideways normal. Wait
- Wait GBP/NZD. – MT is sideways normal. Last weeks sell initially worked out well, but now we have bounced off support and with the RBNZ looking to jawbone the currency lower we have flipped back into a sideways MT.
- Wait EUR/NZD. – MT is sideways normal. Wait.
- Buy AUD/NZD. Trend – MT is bull normal. We now have divergent monetary policy between the RBNZ (dovish) and the RBA (neutral). Look to buy, scale-in, keep stops wide.
- Wait EUR/AUD. – MT is sideways normal. Wait for now.
- Sell GBP/AUD. Trend – MT is bear normal. Look to sell this week for a move towards 1.66.
- Buy AUD/CAD. Trend– MT is bull normal. Another good buying opportunity this week.
- Wait GBP/CAD. – MT is sideways normal. Wait for now.
- Buy EUR/CAD. Trend– MT is bull normal. Look to buy.
- Buy NZD/CAD. Trend – MT is bull normal. Continue to buy, but careful as we may be turning sideways.
- Sell GBP/CHF. Trend – MT is bear normal. Look to sell.
- Wait CAD/CHF. – MT is sideways normal. Trade a break of 0.7350.
- Sell NZD/CHF. Trend – MT is bear normal. Look to sell.
- Wait AUD/CHF. – MT is sideways normal. Wait.
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Economic calendar for the week ahead:
(MT = Market Type: Click for more information on market types.)
Trend: Market is trending in the direction I have listed and I expect it to continue.
Reversal: I am looking for a reversal against the current trend.
Breakout: The currency pair is breaking out of a range.
About the Author
Sam Eder is a currency trader and author of the Definitive Guide to Developing a Winning Forex Trading System and the Advanced Forex Course for Smart Traders (get free access). He is the owner of www.fxrenew.com a provider of Forex signals from ex-bank and hedge fund traders (get a free trial). If you like Sam’s writing you can subscribe to his newsletter.