US Dollar Break Could Break North This Week

by Phil Moore November 24, 2013

All eyes this week will be on the US dollar, with a significant amount of information affecting the Greenback due for release. First up are comments from the Federal Reserve chairman Ben Bernanke, due on Tuesday.

These could provide some hints on upcoming monetary policy for the dollar - in particular traders will be looking for clues as to when QE ‘tapering’ may begin to take place. The beginning of tapering of current dollar easing could provided the impetus for a break higher in the dollars valuation.

Wednesday also sees a lot of potentially dollar affecting news for release. Monthly CPI, Retail Sales and Existing homes sales should provide plenty of data for traders to digest, while the afternoon session also sees the FOMC meeting minutes released.

Elsewhere this week Thursday sees the BoJ (Bank of Japan press release) and ECB president Draghi’s speech. The week concludes with further US data (PPI, Jobless Claims) and also an insight to the Canadian economy with Monthly CPI and Retail figures released.

Key News This Week

Forex

EUR/USD - Having continued to show strength over the course of last week, the pair ended higher, closing above 1.34000. While additional gains are expected to continue this week, there is plenty of resistance ahead for the pair. We would look for 1.3550 to prove a difficult hurdle to overcome and a potential level to look for a reversal.

USD/JPY - Having broken to the upside, the pair now sits above a multi-week trend line which has constrained recent price action. While some pullbacks could be expected, we remain long on the pair. Support begins at 99.90 and 98.80.

USD/CHF - Remaining above a falling trend line that has been in place since July, the USDCHF has struggled to hold onto gains made in previous sessions. It does however remain above 0.9120, an area which shows a considerable amount of support. While this is the case expect the pair to move higher.

GBP/USD - Recent better than expected UK economic figures have pushed Cable back into the range that has defined action since the beginning of September. The range (approx 1.6260 high and 1.5870 low) should continue to contain the extremities of price action over the coming sessions.

Major Indices

DOW - Resistance has now turned into support for the DOW with the 15700 finally being taken out last week. Pullbacks should remain contained at this level. Continue to look higher with the potential for a break of 16,0000 this week.

NASDAQ - The move towards 4000 continued with the index ending the week just below this level at 3985. While this level will prove to be huge psychological resistance, we would expect a move to happen; although consolidation to Fridays gains my well play out first over the coming sessions.

FTSE - The FTSE Index continues to move within its defined range of 6800 to the top, with 6600 confining lower price action. Expect more ‘range bound’ trading over the coming week between these two levels. Only a break either side will confirm the wider trend.

Commodities

Oil – Price has continue to fall, reaching as low as $93-per barrel. The $100 level proved weak support with the price breaking through in just one session. There is plenty of ground to be made up on any rally from current levels. For this reason we would look higher with $92.50 as a first level of support.

Gold – Gold continues to find support just above $1250 but equally has so far failed to make any convincing moves higher. A move back towards $1400 is not out of the question if the tone of the dollar looks set to weaken however. Look for fundamental rather than technical drives to pricing this week.