Weekly Forex Forecast
The Euro has had a strong week initially, but on Wednesday, Thursday, and Friday we stalled near the 1.12 handle. There is a significant amount of resistance between the 1.12 level and the 1.13 level, so I think at this point what we are likely to see is a continued “sell the rallies” type of scenario. Market participants continue to view both of the central banks is very soft, and I think that will continue to be the case. There is a serious argument to be made for US dollar strength due to global concerns more than anything else.
The British pound has fallen again after initially trying to recover this week, finding the ¥130 level be far too expensive. The resistance there to turn the market back down towards the ¥127 level on Friday, where we bounced slightly. However, this is a scenario where I find it difficult to imagine that the British pound continues to pick up, quite frankly because the Brexit still is a major mess. Look at short-term rallies as selling opportunities. If we break down below the ¥127 level, then we will go looking towards the ¥125 level.
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The US dollar struggled against the Japanese yen after initially trying to recover during the week. This is a market that is extraordinarily bearish now, as it is so highly tethered to global risk appetite. The ¥105 level underneath seems to be an area of significant support, mainly due to the 100% Fibonacci retracement level and of course the large, round, psychologically significant figure. As risk continues to be a major issue out there when it comes to all things market related, I suspect that rallies will continue to be sold.
The Australian dollar has fallen during the week only to turn around and recover quite nicely. It ended up forming a hammer for the week, which of course is a very bullish sign, and as the hammer is hanging about the 0.68 level, it’s likely that the bounce that’s coming will probably be sold into as we are in such a strong downtrend. The 0.69 level above is an area where I would expect to see traders come in and push this market lower. There’s a lot of risk out there and that doesn’t favor the Aussie dollar.