The US Dollar Index has rejected longer-term resistance after the recent rally and is expected to turn lower, to resume this year’s bear trend. Failure to break back above the 94.00/90 Fibonacci resistance on the longer-term chart sees the price dip back to the blue 100-day moving average, but we look likely to test the three-month trendline support at 92.10. A break below is as a sell signal and confirmation that the next leg lower in the bear trend has commenced.
We will examine some of the US dollar pairs to see how they line up against this weaker dollar theory.
AUD/USD bottomed exactly at two-year trendline support at 7500/7490 for a bounce to quite strong resistance in the 7650/90 area. Eventually a break higher is expected (perhaps not until next week) targeting 7740/50 and 7800/7810.
NZD/USD beat strong resistance at 6935/65, to complete a bullish inverse head-and-shoulders pattern for a buy signal. We have reached our first target of 7025/35. We need to beat 7045/50, and should do eventually, to target 7075/80 then 7100/7110.
USD/JPY tops just below the most important two-and-a-half-year downward sloping trendline at 114.05/20. The pair is lower as expected to all targets as far as 112.66/62. A break below 112.30 is expected eventually, for a negative signal targeting 112.05/00 and support at 111.90/70. But the outlook remains negative.
EUR/USD bottomed well above six-month trendline and 23.6% Fibonacci support at 1.169080. This year’s bull trend is now expected to resume. The move back above resistance at 1.1800/10 is a short-term buy signal targeting minor resistance at 1.1865/70, then 1.1890/1.1900 and 1.1940/50.
The USD/CAD outlook is negative as long as we hold below 50% Fibonacci at the 1.2906/16 high. This has held for six weeks. Bulls need to clear the 200-day moving average at 1.2945/50 to be back in control.
The pair tests minor support at 1.2790/80 but risks are increasing to the downside. Further losses target 1.2760/55 and minor support at 1.2730/25. A break below 1.2700 targets 1.2655/45.
Spot silver bounced from very important longer-term trendline support at 1590/80 to reach the first target and resistance at 1603/06. On further gains look for 1617/18 and strong resistance at 1622/25. Although we should struggle here initially, further gains eventually target 1640 and strong short-term resistance at 1660/65.
Technical Analyst & Trader
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