EUR/USD
The euro did rally during the week to test the 1.16 level as both central banks involved in this pair met. The reality though is that the Federal Reserve is probably going to remain quite a bit more hawkish than people had anticipated and that opens up the possibility of the US dollar staying stronger for longer.
In fact, on Friday, despite the fact that the ECB was a bit more hawkish than people had anticipated, there is already a little bit of a walk back from there with the ECB member Villeroy suggesting that a rate cut cannot be ruled out.
There are concerns about energy in the European Union and if energy continues to be an issue there, then you probably have a slowdown. I think you have a very real situation where the euro continues to suffer, and short-term rallies are probably sold into.
Silver
The silver market has fallen significantly during the week as rates in America rise and that I think is going to remain the story. As we are closing out the week, we are doing everything we can to hang on to the $70 level, which is a large round psychologically significant figure and an area where a lot of people will be paying close attention.
If the market drops below this support, we are likely to see a lot of downward pressures, with an attempt to get to the $65 level, maybe even as low as $50 over the longer term.
This is a market that I think is going to be very difficult to get a handle on and I think it is going to be very difficult to see sustained upward pressure without rates calming down in America.
Gold
The gold market is going to be very much the same as silver with the exception of the fact that gold does have a little bit of safety attached to it. So, it is possible that we will have the gold market outperform silver and quite frankly that is exactly what I expect.
That being said, outperforming is a relative term and the candlestick for the week certainly looks ugly. I would be keeping an eye on 4500 and underneath there the 4,400 region as potential support.
Any bounce from here more likely than not gets sold into eventually with 5,000 being a short-term ceiling. It is not until rates drop significantly in America that gold can continue to go higher, but all one has to do is look at the longer-term charts and recognize that gold could shed another 1,000 and still technically be in a bit of an uptrend.
Top Regulated Brokers
BTC/USD
The Bitcoin market initially tried to break out during the week, but it is struggling to stay above the 72,000 level. Nonetheless, it is in the middle of a pattern that I think is indicative of a potential turnaround but like everything else it is going to come down to US rates.
If those rates continue to be extraordinarily high it is difficult to imagine a scenario in which the Bitcoin market, which is pretty far out on the risk spectrum, does well.
I am not necessarily thinking that Bitcoin is going to fall apart but I do recognize that it may be difficult to see a move to the upside that is rapid. I think it is more or less going to be a grind to the upside if it is in fact positive.
GBP/USD
The British pound rallied during the course of the week to test the crucial 1.35 level before rolling over. All things being equal, this is a market that I think continues to see a lot of volatility with the 1.3250 level offering support.
I think you have got a situation where market participants continue to sell the British pound on signs of exhaustion and with energy concerns showing themselves in the United Kingdom going forward.
We have a scenario where we could very well see the US dollar rally against the British pound and seeing this pair drop. If the market were to drop down below the 1.32 level, this is a market that could go down to the 200-week EMA currently sitting right around the 1.30 level. I have no interest in buying the British pound anytime soon although I recognize it will probably outperform quite a few of its contemporaries against the greenback.
USD/CHF
The US dollar is very noisy against the Swiss franc as we continue to hang around the 0.79 level. I think this is a situation where if we could break above the high of the week then it opens up the possibility of a move to the 0.81 level.
If we break down below the bottom of the week then we could send this market down to the 0.77 level. All things being equal this is a scenario where we see a lot of choppiness and noisy behavior.
This is a market that will run to safety with the US rates rising and at the same time the Swiss National Bank threatening intervention if the Swiss franc strengthens too much. In that environment I think we do eventually turn to the upside.
NASDAQ 100
The Nasdaq 100 tried to rally for the week, but it had seen the 25,000 level as a barrier. By turning around and showing signs of weakness at this juncture the market looks as if it is testing the 23,800 level.
With this being the case, I do look at this as a market that could very well find itself trying to break down significantly. The 50-week EMA is near the 23,800 level and breaking through there opens up a world of pain. Short-term rallies are possible, but it is not until we break above the 25,000 level that buyers could push back toward possible highs. But right now, interest rates being higher continuing to weigh upon the overall risk appetite.
DAX
In Germany we have seen the DAX fall apart as it did try to rally but now it looks like it has completely broken support with German rates rising and of course a major risk destruction scenario right now with the energy problems in Europe continuing to be a major driver of where things could go.
As liquefied natural gas continues to be an issue as is oil, ultimately this is a market that given enough time I think will have to try to find support below, but we could be looking at a drop towards the 20,000 level before it is all said and done.
Ready to trade our Forex weekly forecast? We’ve shortlisted the best forex trading accounts to choose from.