Forex Market Commentary
Gradual erosion in the Dollar.
The best way to guage the overall position of the US Dollar is to examine the USDX future which measures the Dollar against a basket of currencies. In March and April this year the USDX peaked at 100 and 98 respectively with a double top formation for technical analysis. But since then the Dollar has been losing ground day by day. "Buy the Rumor; sell the Fact". Traders bought into the USD heavily since October last year but ever since april this year they have been seeking opportunities to close out position as the US Fed becomes more and more unambiguous with respect to it's intentions over interest rate policy. Consequently the USDX is set to trade lower than it's current position of 95 by the end of this year. certainly the minutes of the Sept FOMC pave the way for lower expectations on the Dollar and higher profits for US exporters which lifted the Dow for another straight session.
EUR/ USD is trading in a narrower trend around the 1.12. weak German export data did not help however weakness in the USD under pins the Euro currency. Traders are seeking tests of the 1.09 on the low side and 1.14 on the upper side for any direction whilst the USD gradually slides as traders close position ahead of the looming Christmas period and traders wanting to square their books.
Crude Oil WTI is on the 49 mark with the slide of the Dollar; however significant gains for the rest of the year are unlikely as Iran increases production and inventory pile ups start to diminish as anticipated somewhere well into Q2 2016 where excesses in the system can be ironed out and prices can gently rise with a strong price consolidation in the industry.
Gold hovering on the 1140 looks overbought and is only propped up because of the weakness in the USD as a whole. The futures market is net long and so bullion may pause before physical demand pick up for the Christmas period.
Read on Bloomberg about the FOMC minutes and its implications for the USD:
http://www.bloomberg.com/news/articles/2015-10-08/futures-drop-after-s-p-500-erases-half-of-august-rout-emc-soars
and on Reuters today reports on the crude oil market that show that stage is being set for a strong rally next year and after:
http://www.reuters.com/article/2015/10/08/us-markets-oil-pira-idUSKCN0S22XM20151008
In speaking of moving averages; markets are not rational and daily price action volatile, but in the longer run trader expectation and negative sentiment can be collectively summed up through the 50 day moving average. Always look to support and resistance band lines as the key to understanding in the long and short term where prices are converging. Professional technical traders use 50 day and 200 day medium and slow moving averages as fundamental cornerstones for interpreting the direction of price action.
USDX
US Dollar
95.333 +0.036 +0.05%
Support 94.805 Resistance 96.895
Forward 1 year - 96.270s.
95.333 +0.036 +0.05%
Support 94.805 Resistance 96.895
Forward 1 year - 96.270s.
EUR/USD
1.12865 +0.00355 +0.32%
Support 1.11140 Resistance 1.12640
Forward 1 year - 1.14310s.
1.12865 +0.00355 +0.32%
Support 1.11140 Resistance 1.12640
Forward 1 year - 1.14310s.
Crude Oil WTI
49.60 +0.17 +0.35%
Support 46.02 Resistance 51.96
Forward 1 year - 44.76s.
Forward 1 year - 44.76s.
Gold
1140.230 -3.760 -0.33%
Forward 1 year - 1,133.2s.
Pieter Bergli - DeLoren Trust Holdings
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