Dollar ended as the strongest one last week but Friday’s steel fall after solid non-farm payroll job reports suggests that it’s rally is already losing steam. It’s still a bit early to call a bearish reversal for the greenback. Yet, strong risk-on sentiments could cap Dollar’s upside attempts ahead, and even trigger a deeper pull back.
Euro ended as the second weakest, next to Aussie, but the late development in EUR/AUD suggests that the favor is not on Euro’s side. More importantly, developments in some crosses like EUR/CHF and EUR/CAD indicates that market focuses might turn to selling in Euro in crosses ahead. On the other hand, the late rebound in Canadian Dollar opens up some upside prospects for the near term.
NASDAQ closed at new record, heading to 15k handle
NASDAQ’s up trend continued last wee after some hesitation, and finished with a strong close at new record high of 14639.32. Near term outlook will remain bullish as long as 14439.90 supports. Next target is 61.8% projection of 10822.57 to 14175.11 from 13002.53 at 15074.39.
That would be an important level to overcome as it’s firstly close to 15k handle. More importantly, a strong break of 15k could put weekly MACD back into a rising track. That would in turn argues that NASDAQ is back in medium term up side acceleration. Strong break of 15k would set the stage for even more powerful rise in this 2H of the year.
DOW to catch to resume record run.
DOW also made some notable progress even though it’s still lagging behind S&P 500 and NASDAQ. Current development argues that consolidation pattern from 35091.56 has already completed at 33271.93, after brief breach of medium term channel support.
DOW could take on 35091.56 record high this week, and break will confirm resumption of larger up trend from 18213.65. Next target would be 100% projection of 18213.65 to 2919935 from 26143.77 at 37129.47.
Dollar index failed to extend rally, but more upside still mildly in favor
Dollar’s development was rather disappointing, as it reacted more to strong risk-on sentiments much more than the solid NFP report. It’s still too early to call an end to the rise from 89.53 as long as 91.51 support holds. Further rally would still be seen to 93.43 resistance and possibly above.
But we’d maintain that rise from 89.53 is seen as the third leg of the consolidation pattern from 89.20. Hence, we’d expect strong resistance from 38.2% retracement of 102.99 to 89.20 at 94.46 at 94.46. to limit upside, at least to extend sideway trading. Break of 91.51 will suggest that such rise has completed prematurely, and bring retest of 89.20/53 support zone.
EUR/CHF and EUR/CAD turn weaker, more downside ahead
Euro turned notably weaker in some crosses last week. In particular, EUR/CHF’s break of 1.0939 support argues that rebound from 1.0863 has completed at 1.0985 already. It’s also kept below medium term channel resistance, and struggled to sustain above 55 day EMA. The development argues that choppy decline from 1.1149 is still in progress.
Deeper fall is not in favor for the near term to retest 1.0863 support first. Break will resume the fall from 1.1149 to cluster support level at 1.0737, 61.8% retracement of 1.0505 to 1.1149 at 1.0751.
EUR/CAD also dropped notably on Friday and deeper fall is now in favor this week to retest 1.4580 support. The failure to sustain above falling 55 day EMA keeps near term outlook bearish. Break of 1.14580 will confirm resumption of larger decline from 1.5978 and target 61.8% projection of 1.5783 to 1.4723 from 1.5191 at 1.4536. Firm break there could bring further downside acceleration to 1.4263 long term support next.
Canadian Dollar has some upside prospect ahead
On the other hand, Canadian Dollar has the prospect of turning stronger, with help from persistently strong oil price, BoC tapering expectation. But that would be subject to the upcoming employment data this week. Anyway, AUD/CAD’s breach of 0.9258 support argues that larger fall from 0.9991 is resuming. Focus is back on 0.9247 key cluster support level (38.2% retracement of 0.8058 to 0.9991 at 0.9253).
Sustained break of 0.9247/53 will bring some downside re-acceleration to 61.8% projection of 0.9757 to 0.9258 from 0.9394 at 0.9086. There is prospect of even deeper fall to 61.8% retracement of 0.8058 to 0.9991 at 0.8796. Strong rebound from current level, followed by break of 0.9394 resistance will suggest short term bottoming, and bring turn the fortune between Aussie and Loonie.
AUD/USD edged lower to 0.7443 last week but quickly recovered again. Initial bias is turned neutral this week first. Another fall could still be seen, and break of 0.7443 will resume the whole corrective pattern from 0.8006. But we’d expect strong support from 100% projection of 0.8006 to 0.7530 from 0.7890 at 0.7414 to bring rebound. On the upside, break of 0.7615 resistance will indicate short term bottoming, on bearish divergence condition in 4 hour MACD. Intraday bias will be turned back to the upside for 0.7890/8006 resistance zone.
In the bigger picture, rise from 0.5506 medium term bottom could either be the start of a long term up trend, or a corrective rise. Reactions to 0.8135 key resistance will reveal which case it is. Rejection by 0.8135 key resistance, followed by firm break of 0.7413 resistance turned support, will favors the latter case. Deeper decline would be seen to 38.2% retracement of 0.5506 to 0.8006 at 0.7051 first.
In the longer term picture, 0.5506 is a long term bottom, on bullish convergence condition in monthly MACD. Focus is now back on 0.8135 structural resistance. Decisive break there will raise the chance that rise from 0.5506 is an impulsive up trend. Next target should be 61.8% retracement at 0.8950 of 1.1079 to 0.5506 and above. Though, rejection by 0.8135 will keep the case of medium to long term sideway consolidation open.