Will the Dollar Rally?
The G20 meeting turned out to be the dog and pony show that we suspected. Little if anything came out of the meeting other than the stiff arm being given to the Dollar by the major players. We expect that the Treasury and FOMC will now work together to support the Dollar. If they fail to see the clear need for them to act we could see a disorderly run for the exit that could virtually melt the Dollar. We expect to see a counter-intuitive rally in dollar beginning sometime this week. The only question is will the initial “push” they give it get legs? We will cross that bridge after we see clear evidence of the push.
EUR/USD:
WE are seeing this pair push higher than originally expected. We are looking for a sizable pullback this week or next and are selling into major rallies this week.
GBP/USD:
This pair has also pushed higher than expected. We are seeing signs that near term 1.50 may prove to be resistance. We are sellers of rallies here as well early this week and looking for this pair to fall back to the mid to low 1.40’s.
USD/CHF:
This pair seems to have found solid support near 1.12. We are buyers of dips below 1.13 and targeting a move back above 1.15.
USD/JPY:
This pair has pushed much higher than expectec but is now very grossly overbought. We are sellers of rallies near 101 and targeting a move back to the mid 90’s by month end.
AUD/USD:
This pair has been unable to sell off lately but we see a macro head and shoulders top formation taking shape and are again going to sell into rallies this week with stops above the head looking for a move back towards 67.50.
USD/CAD:
This pair hit our target from last week and we are now looking to buy dips.
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