US$ dips: levels to watch by Mary McNamara

The weaker than expected US Retail Sales data took the markets by surprise and the US$ has, not surprisingly, dipped. The lower US$ has resulted in capitulation-style moves with many FX pairs and US stocks have held their ground pretty well as earnings from JP Morgan and Wells Fargo didn’t disappoint. As well, the weaker US$ and seasonal factors seem to be helping lift the price of Oil and this, in turn, should help support the the energy sector of the S&P500. Gold and Silver have given surprise moves though.

USDX 4hr: the 100 level has been rejected and this is helping to develop a possible ‘Double Top’. For me, the ‘neck line ‘ here will be 95.5. Prior to that though I will be watching the 61.8% fib of the recent bull move as this is also near the 4hr 200 EMA and may be decent support IF price pulls back that far. This is near the 97.50 level and so:

a respect of this 97.50 level would support bullish continuation for the index setting up another possible ‘date’ with the 100 level.
Any close and hold below 97.50 will then have me watching for a close and hold below 95.50 and this would suggest a deeper pull back might be in store of the US$.

For now, the index has found some comfort from the weekly pivot and 38.2% fib:

S&P500 30 min: the index dipped on the Retail Sales data but then seemed to digest earnings results and the possible benefits of the weaker US$:

Oil: the $55 neck line level is coming into focus here now:

Gold: is still below the $1,200 level. I would have thought US$ weakness would boost this:

Silver: above $16 but dipping to meet it:

Forex: there is a lot of high impact data today with Chinese GDP and both ECB and CAD Interest rate updates. The current choppy action is making the daily chart set-ups more appealing for me. Lower time frames seem to be a fair bit of noise for now.

E/U: 1.045 remains the level to watch with tonight’s ECB. Any continued US$ weakness will help to lift this pair but the E/U is a fair way below the 4hr Cloud so any new TC ‘LONG’ signal would be a bit of a way off:

A/U daily: I have relaxed the lower trend line of the trading channel to capture more price action. It now sits at 0.755 and this will be the support to watch with today’s Chinese GDP. Now, a number with a ‘6’ in front of it will probably rattle the markets and the AUD and NZD respectively BUT, really, think about it. This is still a great ‘ball park’ to be in! And also remember that this is coming off an ever increasing base and, so, even a 6ish number now is better than previous years of double digit GDP.

Cable: this is the interesting pair at the moment. The weaker US$ and decent overnight GBP data is helping price to bounce up off support and a new TC ‘Long’ signal could form quite easily. Price is just under the 4hr Cloud and so it wouldn’t take much more of a boost to trigger a new signal. Watch for any continued US$ weakness with this Yin and Yang style move.