The US$ has been sold heavily following the move to a more dovish stance by the Fed and it would now seem that we are likely to be in for some volatile trade around current levels, probably until Friday’s US jobs data. Overall though, the charts look very much in “risk-on” mood – and this is in spite of the ongoing US/China trade negotiations, where a large difference of opinion still seems to hold sway. Keep an eye on UsdCny, which looks increasingly heavy.
The dollar index (DXY) was sold down to the 100 DMA at 95.25 but has so far bounced off that to fish at 95.40. A daily close below this level would suggest further US$ weakness. Until then I would take a more cautious approach towards the dollar as there is a degree of divergence in the charts of various major pairs. Some weak China data later on could easily drag the commodity currencies lower, so stay nimble.
On the crosses, GbpAud and GbpNzd are looking increasingly heavy, while AudJpy and NzdJpy both look positive
Gold did as we suspected and turned higher again, and the charts from both Gold and Silver appear to be lining up for further gains although the short term momentum indicators do also hint at some bearish divergence so look to buy dips I think.
We have bought WTI at 54.50, as per our previous view although it has failed to follow through so far. Keep stops tight at 53.50.
Stocks look increasingly positive, so again, look to trade from the long side.
*Trade of the day: January 31, 2019; 10:53 AM(AET)
*This is a personal opinion only, based on the look of the table below, and carries no guarantee of success.
All trades are good till 5.00pm NY time. All “in the money trades” should have the SL raised to break-even, or managed manually. All “out of the money trades” should keep original SL in place.
Sell AudUsd @ 0.7290. SL @ 0.7315, TP @ 0.7200
Buy AudUsd @ 0.7200. SL @ 0.7150, TP @ 0.7290
Buy Gold @ 1308. SL @ 1298, TP @ 1325
Buy EurUsd @ 1.1435. SL @ 1.1395, TP @ 1.1525
Sell EurUsd @ 1.1515. SL @ 1.1545, TP @ 1.1450