In this week’s Market Outlook we take a look at the key charts ahead of the election with #AUDUSD, #EURUSD , #NZDUSD and more!
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Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
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In this video, we’re going to go through the Forex Market Outlook. We’re going to identify some key charts.
For me, really, the US Dollar is going to be the main focus. We haven’t really seen too many cross pairs trending lightly. The US Dollar is at a key level, which is super interesting, along with some seasonal data. So we’ve got on the right-hand side here some US Dollar index seasonality, and it is a 20-year range ended in 2019. It’s a pretty up to date seasonal analysis or seasonal data for us, and we can see in September we were looking for those long opportunities. We were looking for the potential for the US Dollar to rally up, and we didn’t really get the rally that we were looking for. Again, just to kind of reiterate this seasonality usually shows us tops and bottoms in the markets. It never really shows us the move that’s going to come.
Obviously, we have an unprecedented year because of the COVID-19 outbreak as well. So, seasonality may be thrown off a little bit through that, or the moves that we’re expecting may not be as big as what we would typically look for. However, looking at this information here, I can see that in November we typically see a top in the US Dollar, and we see some downside. Now, we have been seeing a downside in the US Dollar. That’s also reflected on the strength and weakness table going into this week. The US Dollar is the biggest loser of the week, and everything else hasn’t really budged surrounding that.
So, the US Dollar is at an interesting point, and it’s going to be a bit of a talking point for us going into this week. If we just minimize these, we have the US Dollar index and what I wanted to highlight was the fact that 92 US Dollars, really for me, is going to be one of the key levels to watch.
We can see that previously the market has bounced at these areas, we can also see that the most recent monthly or weekly low was around about 92 US Dollars as well. So, this level to me is super important, and if the US Dollar index is going to continue or the US Dollar bearishness is going to continue then, 92 US Dollars is the level I’m going to watch for the breakout. If we were to break out of that level, the US Dollar could really be pushing towards these 88 levels, which we haven’t seen since the start of 2018.
So, really, 92 is going to be the big talking point for me this week. If we can break through that, the US Dollar weakness is going to continue. If we reject that, I think we’re going to see some bullishness out of the US market.
Now obviously, I’d only expect it upwards of this 95 area. And if this previous high drops, we’ve got first targets at 90 Dollar or 91 Dollars, and then if it continues we’ve 88 US Dollar lows. But just the way the markets are moving at the moment, suggests to me that we could see some further downside on the US Dollar index.
Now, what does that mean for us going into this week? Well, we are looking at some US Dollar reversal because we’re looking for that US Dollar strength since we have the Euro over here where the market has come up into some key levels. This is what’s happening across most of the major currency pairs. The price is coming up into key areas of support and resistance like the US Dollar index.
What we need to identify is how is that US Dollar index shaping in order for us to look for moves.
We’re looking for some short term downside here on the Euro. Perhaps, back into these lows. However, if the US Dollar starts breaking that 92, and you know we could really see some upside to continue in this place. This is why 92 US Dollars for me is going to be so key because it’s going to give us the direction that we’ve been looking for.
Now typically, we do tend to see the markets start trending throughout December. So it’s going to be interesting to see how the markets react to these key levels because not only is EUR/USD at a level. But USD/CAD is also at a huge level, which we pointed out last week, and we’re at this 1.3 level, where the market has really bounced, and reacted to in the past, numerous times. We had this really nice weekly bullish candlestick the week prior. This week is very low ranging, there’s nothing really going on.
For the daily time frame, what we were looking for was the market to start giving us some bullish price action, and what we looked for was a four-hour change in simplicity. So, if we do start seeing the cycle changes, we do start seeing the markets creating higher highs on these four-hour time frames, that could give us a sign that we are going to see that rejection of the 92 US Dollar level. If we don’t, then I would expect that the four-hour trend to continue. So at the moment, we have this going on at USD/CAD. If it breaks 130-130, look for that further potential long position. However, if that US Dollar does just slide past 92 US Dollars, which it could really do considering the seasonality, we’re going to be seeing some further downside to these markets as well. So, I really want to watch out for these key areas.
Kiwi, again, another market that’s back at some key area of the structure. What we may actually get is the US Dollar break 92 very early. So, if the market breaks 92 early but then gives us a bullish candlestick like a false breakout on the US Dollar index, perhaps we may start seeing some false breakouts on our majors. What I’m really looking for here is if it is going to give us a little bit of a false breakout. Is the market breaking above these highs? Or potentially reject it and see some further downside? Because the US Dollar – like I said – is at that huge level. Unfortunately, when the price comes into these levels, you have to ask yourself the question, is it going to break or is it going to bounce? Strength and weakness and the seasonal charts suggest to me that potentially it’s going to break. However, how many times have we seen the seasonal pattern play out this year? Not very often.
So we need to be aware of both situations. Is the market going to break and close that 92 level? If it does, we’re looking for further US Dollar weakness to come into play. If it bounces from it and holds it above, expect some US Dollar bullishness. The US Dollar is at a really key point.
Thanks for watching this video update. I’ll speak to you soon.
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