Last week played out much like we expected. The RBA did raise rates while the BOE cut and the ECB did nothing. This week we do not have a lot of new data coming out so look for more range bound action this week. We continue to see the Dollar struggling in the near term but ultimately still holding support well above the double bottom lows near 75.
General Market Comments
Last week played out much like we expected. The RBA did raise rates while the BOE cut and the ECB did nothing. This week we do not have a lot of new data coming out so look for more range bound action this week. We continue to see the Dollar struggling in the near term but ultimately still holding support well above the double bottom lows near 75. We continue to see the Dollar finding support and even turning higher later this spring but near term look for continued chop. Do not be confused by recent ECB statements as they will have to lower rates soon no matter how bad inflation is.
Europe – Euro, Pound, Swiss Franc
Last week we told readers to sell rallies above 1.48, for those of you who took that trade you should now have roughly 300 pips of profit on the trade. We suggest covering at least half of the position at or near 1.45 and then run a stop on the remaining position near 1.4689 or lower. This week we are more apt to buy dips below 1.45 with stops below the Dec 2007 lows.
The cable broke all the way down to 1.94 after the BOE cut rates by .25. We see this market holding what looks like double bottom support in the daily charts and are long buyers below 1.9450 with stops near 1.93. We are targeting a move to 1.98 by next week.
The Swissy pushed through our 1.10 target and we have exited our longs. This week we expect to see this market trade in a range between 1.11 and 1.09. Sell rallies near 1.11 and buy dips nears 1.09. Use 21-55 point stops.
ASIA – Yen, Australian Dollar
We also hit the target in this pair from last week and have also exited these longs. Near term we see more sideways drift with a slight upward bias. We will be looking to buy any major dips this week with stops below 105.
The RBA sis raise rates as expected but the market failed to follow through. Near term we see resistance near .9100 holding. We are selling rallies over .9050 with stops above .9100. Target a move back near .8700.
North America – Canadian
Last week we suggested selling rallies over parity. If you did that, you have had a number of opportunities to exit for 100 pips or more depending on entry point. This week we will continue to sell rallies over parity with stops above 1.0134, targeting a move between .9800-.9900.
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