The U.S. dollar (/DX) was slammed lower today but gold also fell as well as other commodities, equities and U.S. bonds. Oil traded flat. Because all these instruments fell, it is worth taking a closer look at what gained on the bearish day. The Swiss franc and the euro gained today on the ECB’s decision to leave rates unchanged. In addition, the uncertainty drove volatility higher and strengthened the yen. As a side note, tomorrow will see nonfarm payroll for the U.S., which is usually a high impact announcement.
The EUR/USD ebroke through the key resistance level we have been watching and is now on track to rise to 1.38 if not higher. The breakout today was sizeable and had the momentum behind it we like to see. This could mean dollar weakness across the board, back to the annual lows for the /DX.
(see EUR/USD below)
The AUD/USD bounced slightly today but we are still anticipating a retest of the annual lows on this pair. It will not surprise us to see the trend line retested but we do expect the annual low to be tested before the trend line is broke on this pair. With gold prices continuing to slide, the move down is more likely.
(see AUD/USD below)
The USD/JPY continued to slide lower on rising volatility. Even though price is down, we do expect another attempted move higher on this pair which hopefully will trigger our sell limit.
(see USD/JPY below)