Today, it’s all about the USD. EURUSD continues toward our upside target, while USDJPY is pedaling as fast as it can to compensate. As we’ve discussed all week, this leaves DXY at long-term critical support.
Thanks to VIX and USDJPY, equities were able to put on quite a show yesterday, rallying back above support as expected.
continued for members…
It should backtest the yellow channel top and, most likely, the SMA10 (2436.31) today. If it drops through, I’d want to be short again. Otherwise, the rally should extend once the backtest has occurred, with 2448 the next overhead resistance.
As far as DXY targets, I like 98.5ish around Aug 3. If it doesn’t bounce here, watch out. The next support isn’t until 92-93.
Note that CL has reached overhead resistance, so should at least pause here.
VIX continues its winning ways.
Bonus chart: gold — which has been excessively weak since running into the yellow TL on Jun 6 — is almost certain to fall if DXY bounces here.
UPDATE: 9:44 AM
Just sliced through the SMA10 and SMA20. I’d watch for a rebound here, but as always, use stops. It has gone a little further than necessary, which should be a little worrisome to bulls.
Unfortunately, I won’t get to stick around to find out. I’m running to my next meeting.
GLTA.