The Forex Week In Review

A wild week comes to an end in Forex markets and what a week it has been. Further weak data out of the US saw USD longs liquidated further still and the ensuing surge against the Dollar across the G10 space has pushed markets right out of the recent ranges we had been stuck in, with some now very interesting levels across the board.

The NFPs are up next week and with positioning now greatly reduced, it seems that the risk of a Dollar surge on a strong number could see these recent spikes reversed sharply. Equally, a week number is going to see considerable USD downside. As we begin the new month, USD seasonality is an interesting factor to consider.

Overview

  • USD A turbulent weak for the global reserve currency as weak data fuelled a further unwinding of already much-reduced USD long positions. Fast money have been keen sellers this week, profiting from the shift in positioning and though the Fed highlighted the transitory nature of this data soft-patch, markets have reacted sharply.
  • EUR Has enjoyed a mercurial week, surging through key resistance with barely a pause. The unwinding of the extremely crowded short EUR trade has been incendiary as positions were liquidated following weak US data and stops on weaker positions and fade-the-rally types were hit. Trading back up toward Pre-QE levels, we might start to challenge some longer term accounts if this move persists.
  • GBP Has been another beneficiary of the Dollar unwind, trading back up toward YTD highs. However, weak manufacturing data on Friday saw ample supply enter the market as concerns surrounding the fragility of the UK economy, couple with the election risk going into next week, were enough to put an end to the UK currency’s ascent.
  • AUD A similar story to that of GBP. Having made fantastic ground on the week, breaking higher through key resistance, we saw the key.8000 level mark the apex of the Antipodean currency’s journey this week as this recent strength fuelled a jump in expectations that the RBA will cut rates at this week’s forthcoming meeting.
  • JPY A mixed week for the Japanese currency which saw some month end selling induced weakness. Better than expected Industrial production figures added support as well as an improved housing starts data set. CPI came in better than expected and saw JPY end the week strong except against USD.
  • CAD Much weaker on the week as the Canadian currency suffered from the growth concerns stemming from the US economy and the continued China data soft-patch. GDP came in at a very marginal beat at 0% but concerns about the oil-price induced damage to the Canadian economy still abound

Key Views

EURUSD Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish
GBPUSD: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish
USDJPY: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bullish
AUDUSD: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bearish
USDCAD: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bullish

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