USD/MXN
The US dollar had a significantly strong push to the upside at one point against the Mexican peso but by the end of the week we have seen a bit of a sell off. The 17-level underneath I think continues to be a major floor and if we can break down below there, we could see the US dollar drop down to the 16.5 level.
Short term rallies could occur but at this point I think you have to look at this as a market that you continue to fade on short term rallies because there is such a major resistance barrier in the form of the 17.5 level and of course the interest rate differential favors the Mexican peso by quite a bit.
S&P 500
The S&P 500 has initially fell during the week, but it does look like it's trying to fight back a bit in continued consolidation. The consolidation has been between the 6800 level and the 7000 level since the beginning of December, and I think you have to look at this as a market that eventually tries to break out to the upside.
If and when we can get a daily close above the 7000 level, then it's likely that the market could really start to take off. If we were to break down below 6800 that would obviously be a negative turn of events.
EUR/USD
The euro has fallen quite a bit during the week, but it continues to see support near the 1.18 level, and I think that's something worth paying attention to. With this I would be very cautious about this pair.
I think we are essentially stuck in a sideways kind of action with the 1.18 level being a bit of a magnet for price. The 1.1850 level above is significant resistance to the 1.1750 level underneath being significant support.
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USD/CAD
The US dollar has rallied against the Canadian dollar, but it continues to see a lot of noise near the 1.3750 level an area that's been important multiple times recently and I think we are just chopping back and forth in order to try and figure out whether or not we can rally from here.
If we can rally from here and break above the 1.3750 level that would be a very strong sign for the US dollar just as a breakdown below the 1.35 level would be extraordinarily negative.
Key Technical Support and Resistance Zones
Gold
Gold continues to see a lot of noise initially pulling back a bit during the trading week, but it looks like there are plenty of buyers underneath willing to take advantage of cheap gold if and when it occurs. Ultimately, I think you've got a situation where the 4800 level will continue to be a bit of a floor in the market, and the 5000 level of course will be an area that ends up being a bit of a magnet for price.
Ultimately, I think you've got a situation where the market is going to continue to be buy on the dip and eventually rally but it could be very noisy as we had seen a very tough turn of events over the last couple of weeks after what had been a runaway train for this gold market. Over the longer term I anticipate we will reach the highs again but it's going to take a lot of patience.
Bitcoin
The bitcoin market continues to look for some type of momentum to the upside but the good news at least is that the markets are at least somewhat stable and that in itself is a big victory for bitcoin which of course has been miserable for some time. The $60000-level underneath is going to continue to be a support level and a large round psychologically significant figure that must hold for any hope of recovery.
USD/JPY
The US dollar rallied quite nicely against the Japanese yen during the course of the week as the 152-yen level continues to be supported. The 50-week EMA sits just below there as well, and I think you've got a situation where traders are going to continue to buy the dip as the interest rate differential continues to favor the US dollar.
The Bank of Japan is stuck with its monetary policy, and I just don't see how that changes, so I think we are entering a consolidation phase between 152 yen on the bottom and 158 yen on the top. If we could break above the 160-yen level that would be a major violation of resistance that goes all the way back to 1990.
GBP/USD
The British pound has fallen significantly during the week to test the 1.35 level which is a large round psychologically significant figure that has been important a couple of times and the fact that we are at least trying to defend that is a good sign.
But it's also worth noticing that the latest economic numbers out of the United Kingdom were a little lackluster and therefore I think out of all of the major currencies right now the British pound might be one of the weakest against the US dollar so we will have to watch this market quite closely. If we see the US dollar strengthening across the board this might be where you see it really flex its muscle.
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