Currency markets have relented the Dollar sell off to start the week as equity markets in Europe, UK, and the US have all taken hits in Monday trading. However, with volatility still relatively low and volumes down on selling, equity markets again look poised for another strong—or at least steady—week which should foster more continued Dollar weakness.
Our outlook will remain to buy against the USD on dips as heavy government intervention will bring inflation in the US and a steady, but steepening decline in the Dollar over the foreseeable future in currency markets. We will also keep our eye on the Yen for more losses this week and gains in commodity-driven currencies such as the AUD and CAD. Daily Currency Pair AnalysisThe USDJPY has breached the ever-important 100 level last week for the first time this year.
As long as equity markets stay on the rise and volatility is down, we will look for the 100 SMA to draw the pair toward 106 levels. AUDUSD – The Aussie has seen a strong push against the Dollar and a break of the January highs of .7267 should send this pair into the .7500’s. We will look for opportunities to buy dips under .7000 in anticipation of another test of that high that was set earlier this year.by John Rowa, Executive Director of Trading