Bond markets are the major
market mover behind the USD strength in the past 2 weeks after the first
article hinting FED’s planning a QE exit. US 10-Y Note is breaking down on
Weekly charts with a first measured target around 127. While most look at the
Global Stock markets the major FX moves are affected by the Bond markets because
of the huge volume traded. As the FED is globally setting the price of money we
should keep an eye on the developments there.
The US 10-Y
Note Yield is breaking above the last High and it’s signalling a rise in the
implied US Interest Rates as a direct result of the assumed FED QE exit. This
logically concides with the topping out of the Global Markets in the last week.
Rising Interest Rates in the US are USD positive as the Interest Differential
to the EU and other CBs is shrinking as the ECB & RBA are actually lowering
the rates.
USDX – The
Dollar Index is retreating from the recent High and is sitting comfortably at
the Support around 83. I would assume it will be consolidating for the next
week until it goes down to the Flat Support around 82.50 where it will meet the
Lower Channel Support. That weakness is easily seen in the retracements in the
currencies and Gold.
EURUSD Daily
chart as mentioned before has broken above the psychological level of 1.3 and
run into the real Resistance around 1.3040/50. The flat 200-Day MVA at 1.3115
is a powerful magnet and next week it will be touched with almost 955
probability. It coincides with the Higher Bollinger Band around 1.3130 and as a
rule of thumb once the 20-Day MVA is broken with confirmation the price would
travel to the other BBand. The ultimate Support is provided my the layered 8,
20 and 50-Day MVAs right below the spot price. The Momentum measured by the
Stochastic Oscillator is giving confirmation to the upmove at the present
moment.
GOLD Daily
Chart – USD weakness translates into surge in Gold’s price. Technical breaking
above the 20-Day MVA above 1410 it’s next target lays around 1460 with the
50-Day MVA. Momentum has turned positive and from a wider perspective Gold has
already put a Higher Low around 1355 after the steep liquidations in April down
to around 1320. The probability is favoring a surge to the upper Range of the
last 2 months as noted by the 50-Day MVA and the Higher Bollinger Band around
1475.
USDJPY Daily
Chart – The Momentum has turned down and the Weekly chart is Turning as well.
It coincides with the BOJ officials’ rhetoric that the current weakening of the
YEN has been enough to make up for the former disbalances and they would be
confortable with an assumed 95-105 range.
The multiyear
Fibonacci retracement 50% level at around 99.50 is very important and will be
pivotal going forward. The immediate support is lying at the Lower Bollinger
Band around 98.90 and there is a good probability that we see these levels in
the next 2 weeks. Given the Stock market weakness we can see more unwinding in
the JPY pairs and witness USDJPY selling getting even steeper. The ultimate
Support is at the Ichimoku cloud around 97.80.
