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Dean Forex Market Commentary – 28 November 2016

We have started to see the dollar come under some pressure this morning. It has been on a tearaway run over the last few weeks and probably due some sort of breather. This could bring the commodity currencies into their own as they will benefit from stronger gold and oil prices. Forex traders will also be positioning themselves for Non-Farm Payrolls at the end of the week.

Dean's Daily FX Update – 28 November 2016

 

Noteworthy News

  • The Democrat Party have lent their weight to the vote recount in Wisconsin, I seriously doubt that this would change the outcome of the election but it could bring a little uncertainty to the markets, especially in light of the move we have had since 9 November.

Recap

It is always tricky to jump back into the market the Monday after Thanksgiving weekend, but if you consider the pandemonium in the markets since November 9th it is even trickier. The USD has been a rampaging machine the last 3 weeks and we have patiently been waiting for the correction, I thought that we would see the broad rally last week leading into Thursday – but it never came.

Looking around the market, there are early indications that this could be the week we get some form of reversal. We got a nice warning from the SNB (Swiss National Bank) last week that “enough was enough” and perhaps that was another indication that the USD would come under pressure this week. Traditionally I sit out the market on the Monday after Thanksgiving, I wait for the NY session to dictate the week, but it seems as though the Asian Pacific session may be setting the tone early this week.

Both the EURUSD and GBPUSD are both testing the highs traded on Friday at 1.0650 and 1.2530 respectively. There will be the inevitable profit taking here before the London open, but if we are to break through those highs we could be in the midst of broad USD selling. If it was to break these levels I would be looking for a secondary entry.

The USDJPY was the interesting story this morning, we had formed many support levels on its way up but just as resistance did last week, support crumbled this morning. It eventually found support at 111.35 before we saw a sharp bounce, but there is no reason that we couldn’t see 111.00 – 110.00 today if this a start of the correction.

The Gold price has had a nice bounce this morning and like the FX pairs, it now sits testing a big resistance level. Coupled with very strong Chinese data over the weekend the Gold price has been the catalyst for the AUD to strengthen. It is currently testing both major resistance and the underside of a broken trend line. I feel that there could be a test of 0.7500 today and if that breaks it could extend by another 40 pips or so.

The NZDUSD has also benefitted from the weaker USD this morning and the round figure of 0.7100 could be the next target, a break of that level and like the AUD we could test higher.

The USDCAD would be the pair that I sit out for now as it could be “thrown” around a little by the OPEC meetings on Wednesday. The risk is that the pair will move on headlines and there will be many this week. Last week looked as though there was a definite deal in the offering, but as we got closer to the weekend those prospects looked less certain. One feels that this entire deal hinges on Iran, and with that deal the next move on the USDCAD will be dictated.

Today could be a telling one and it seems as though this could be the start of some broad USD selling, the Asian session have definitely let their feelings known and I will wait to see if both the London and New York session follows through on this momentum.

Daily FX Ranges

I wrestled with myself this morning but decided against putting in any FX ranges today. One gets the feeling that we could be in for something drastic today and it would be irresponsible for me to try and dictate ranges on a day like this. I could be wrong but I would prefer to let the market “wash out” today and set our short term ranges on Tuesday.

As I mentioned in the video though, I have migrated to the Daily Charts today and will be using Fibonacci to set targets. This evening I will be able to look at price levels again and set intraday targets for you.

For the USD bulls out there – please be cautious out there today.

Important Economic Data out today

  • 14:00                     EUR                        ECB President Draghi Speaks

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