If we break down below the ¥101 level, that could be a major turnaround just waiting to happen.

The Canadian dollar has rallied a bit during the trading session on Wednesday to show signs of life again, as we are now threatening the ¥105 level. Furthermore, the 50-Day EMA is sitting right around the same level as well, so I think it’s probably only a matter of time before we see a bit of a fight on our hands.

Factors to Keep in Mind

• The oil markets because we do see some type of recovery in the oil markets, which obviously helps the Canadian dollar.
• Most of the effort in this market will probably come from the Japanese side of the equation.
• The Bank of Japan continues to fight to keep the 10-year yield in that country down to 0.25%, which is a Herculean effort, to say the least as interest rates around the world have been rising.

In fact, Japan has seen inflation for most of this year, which is the first time in years. Because of this, the Bank of Japan has to step in and continue to buy “unlimited bonds” in order to keep the bench right where it wanted. That’s tantamount to printing “unlimited yen”, which obviously increases the supply of that currency in the markets. If the interest rates around the world continue to rise, the Japanese yen will continue to take it on the chain, which is what we have seen everywhere, not just against the Canadian dollar.

Ultimately, we are in an uptrend, and now the question is whether or not we can break significantly above the ¥105 level. If we cannot, it’s more likely than not that we are going to see a sideways type of market, with the ¥102 level underneath offering support, as we banged around and tried to work off some of the froth. If we break down below the ¥101 level, that could be a major turnaround just waiting to happen. A lot of this is going to come down to the overall yields in bonds, not just these 2 countries. Because of that, you need to keep a broad-based perspective on yields.

Ready to trade our daily Forex forecast? Here’s a list of some of the best Forex brokers to check out.

By the end of the Wednesday session, we could probably have something in the realm of clarity that we can start following for a bigger move.

• Gold markets rallied a bit Tuesday as we wait for the crucial CPI numbers.
• CPI will come out on Wednesday, and it could have a major influence on what the Federal Reserve does next, as Wall Street ways to see whether or not it gets cheap or free money.

The 50-day EMA sits just below current trading, and therefore it’s potentially a short-term support level. If we break down below the 50 Day EMA, then it’s possible that we could go looking to the $1750 level. That’s an area where we had seen previous resistance, and it’s likely that could come in and offer a bit of “market memory” and make the market react to it.

If we break out above the $1815 level, then it’s possible that the market could go looking to reach the 200 Day EMA which is near the $1850 level. The 200 Day EMA of course would cause quite a bit of resistance, so breaking above that would kick off a lot of algorithmic trading. I think the only thing that you can count on now is going to be a lot of noisy behavior though, so given enough time I think that this is a market that needs to make a bigger move.

Waiting for CPI Numbers

The CPI numbers coming out hotter than anticipated will have people freaking out, running to the US dollar as the Federal Reserve will have to become much tighter and more aggressive with its monetary policy. Quite frankly, the Federal Reserve keeps telling everybody that it is going to be tighter and more aggressive, and therefore it’s a bit surprising that the market is trying to argue the point. However, this is a market that I think given enough time will either start to fall toward the low again or perhaps break above that crucial 200 Day EMA. By the end of the Wednesday session, we could probably have something in the realm of clarity that we can start following for a bigger move. I think that the real signal is probably at the end of the day on Wednesday. Between now and then, it’s going to be nothing but a lot of choppiness and sideways behavior. The market being between the 50 Day EMA and the 200 Day EMA suggests that we are getting a lot of crosscurrents at the same time.

Ready to trade our Gold forecast? We’ve shortlisted the most trusted Gold brokers in the industry for you.

Ultimately, I prefer the US dollar against almost all currencies, this one included.

• The AUD/USD currency pair went back and forth Wednesday
• The pair continues to dance around the crucial 0.68 level.
• It’s likely that we will end up seeing further downside pressure.
• The Australian dollar is highly levered to the commodity markets, and you need to pay attention to what’s going on in those markets to get an idea of what’s going to go on in this market.

Time to Start Shorting?

As you know, commodities have been getting slaughtered as of late, so that is not going to help the Aussie anytime soon. I believe at this point it’s likely that rallies will get sold into, especially near the 0.69 level, which is an area that has been significant support previously and should now have a bit of “market memory” attached to it. In other words, I would anticipate a lot of selling pressure. At the first signs of exhaustion near that level, I will not hesitate to start shorting the Aussie.

If we break down below the bottom of the lows over the last week, it’s likely that we will continue to see the US dollar strengthen quite drastically, driving the AUD/USD pair down to the 0.67 handle. They break down below that level and could open up even more aggressive shorting, sending this market down to the 0.65 level. Ultimately, I don’t have any interest in buying this market anytime soon as the Aussie is limp, despite the fact that there was a surprise interest rate hike from the Reserve Bank of Australia just a couple of days ago.

The 50-day EMA sits just above the 0.70 level, and I think that would be the absolute “ceiling in the trend.” Because of this, the market is likely to respect that as a very difficult barrier to overcome, and I don’t think that it will happen. However, if it did, then you would have to pay close attention to this market because I think at that point, we could go to the 0.72 level. The 0.72 level is an area that currently features the 200-day EMA, so you should pay close attention to it. Ultimately, I prefer the US dollar against almost all currencies, this one included.

Things are so bad in the European Union that they are talking about rationing energy, and that  is going to continue to weigh upon the economy.

• The German DAX index drifted a little bit lower to kick off the trading session on Monday.
• The index broke down below the €12,500 level, before bouncing a bit.
• By the end of the day, we ended up forming a bit of a hammer.

This suggests that we could get a bounce, but it’s also telling that we continue to threaten the same support level time and time again. In other words, it’s very likely that we will continue to see rally sold into, which makes quite a bit of sense considering what is going on around the world.

Economic Impact

Keep in mind that the DAX has a lot of export-laden companies built into it, so the rest of the world certainly has a major influence on what happens in Germany. With the entirety of the world looking likely to go into some type of recession, this has a major influence on these exporters and German markets will probably continue to struggle. Furthermore, you also have to worry about the fact that the German economy looks like it’s about to take a major nosedive.

Things are so bad in the European Union that they are talking about rationing energy, and that  is going to continue to weigh upon the economy. That being said, I think we are going to see a situation where we get a little bit of a bounce, but a lot of people will be looking at that bounce as a shortening opportunity. At the first signs of exhaustion, it’s very likely that this market falls, especially with the 13,000 level above being a large, round, psychologically significant area of resistance, and of course has shown itself to be important in the past. Above there, the 13,250 level is another area that you need to pay close attention to.

The alternative is that if we break down below the bottom of the candlestick from Tuesday, the market is likely to drop down to the 12,250 level, possibly even the 12,000 level after that. We have been falling rather hard recently though, so I think it’s more likely that we see a bounce here in order to build up more downward momentum. If we break above the 50-day EMA, then it’s possible that we could see a move to the upside, but that would take a massive shift.

Buying on the dips will more likely than not be the best way forward.

The US dollar rallied ever so slightly during thin trading on Monday, as it was Independence Day in the United States. The more exotic currency pairs like the US dollar/Indian rupee would of course be very quiet. That being said, the candlestick for the day looked just like the ones before it, like perhaps the Bank of India is fighting the depreciation of its own currency. That’s probably true to a point, although the DOI has a long history of eventually letting the market go its own way, and seemingly find itself more concerned with the rate of change than anything else.

You can see that until a couple of days ago, the US dollar was shooting straight up against the rupee, reaching the ₹79 level. It appears this is an area that the BOI may defend, but eventually they will let the market go higher. The candlesticks over the last couple of days suggest that we could see a bit of a pullback, but quite frankly, in a massive uptrend like this it makes sense that we would see that happen. After all, some people are going to need to take profit after a huge move higher, and yet others will be cautious about paying for this pair all the way up in this area.

The 50-day EMA sits just below the 78 level, and is rising quite steadily. Because of this, I do think that the downside is going to be somewhat limited, unless the Federal Reserve does something to shock the markets. As things stand right now, the Federal Reserve is by far the most hawkish major central bank in the world. In fact, it could cause the US dollar to be a bit of a wrecking ball against almost everything else, especially emerging market currencies such as this one.

Another thing to consider is that if we do end up entering a global recession, economies like India will bear the brunt of this, as we continue to see a lack of international trade. Beyond that, some countries such as India will have to worry about wheat over the next several months, not exactly a positive sign for the economy going forward. That being said, it should be noted that the Russians have allowed grain to be exported from Ukraine recently. Buying on the dips will more likely than not be the best way forward.

There’s no realistic scenario in which I am a buyer as things stand currently.

Bitcoin had a relatively quiet session on Wednesday as we are hanging just above the $20,000 level, an area that of course is a large, round, psychologically significant figure. The market breaking down below that level could open up quite a bit of fresh selling pressure and kick off the next leg lower. Ultimately, if we break down below the $18,000 level, this thing could start falling apart yet again.

Keep in mind that there is a line of downward pressure to begin with, and if we were to break down below the $1800 level, the market will probably try to pick up the $16,000 level, possibly even lower than that. From a longer-term standpoint, the technical analysis suggests that we could drop to the $12,000 level. The $12,000 level is an area that is important from the past breakout, and it was where we kicked off this bullish run that the market is currently destroying.

Looking at this chart, it’s obvious that we are very much in a downtrend, and it would be difficult to see this as a bullish setup unless we clear the $30,000 region. That essentially means we need to gain 50% before we can even start to talk about Bitcoin being remotely bullish. With the tightening monetary policy in the United States and the fact that everything is being sold off currently, I just don’t see how a risk asset such as Bitcoin attracts a lot of inflow. The Bitcoin market will continue to be noisy, and of course, it will get the occasional rally. That being said, we have a long way to go before Bitcoin builds enough of a base to be attractive, so I think what we are hoping to see is some type of breakdown followed by a couple of months of consolidation. I think this is very likely going to end up being much like the last crypto winter, meaning that we will go sideways for a while, while people continue to accumulate. If we get down to the $12,000 level I will start accumulating, but I think we have plenty of time to do that. There’s no realistic scenario in which I am a buyer as things stand currently. However, if that changes I’ll be the first to let you know here at DailyForex.

The German index has lowered to kick off trading on Monday and then fell straight down to the floor. That’s not a huge surprise, due to the fact that the inflation numbers in the United States were horrific on Friday, and it looks as if we are going to continue to see a lot of negativity around the world. If the Federal Reserve continues to need to tighten monetary policy, it does make a certain amount of sense that we will continue to see more of a “risk-off” type of attitude globally.

If the DAX is falling apart, you can bet your bottom dollar that a lot of the other smaller indices are doing the same thing and will continue to do so. Yes, we are a bit overextended to the downside, but at this point, it’s likely that we will continue to see this area underneath as a potential support level that could cause a bit of a bounce, but it also looks like it will get shot through. Ultimately, I think we break down below there and go looking to the 12,500 level. Rallies at this point should see plenty of resistance at the 50 Day EMA, as well as the 14,000 level.

Moves like this generally do have a bit of follow-through, but they also tend to have a bit of a bounce as markets cannot go in one direction forever. However, if we were to break down below the bottom of the candlestick for the day, I think that would only show an exacerbation of the nastiness in this market. The EU has a world of problems right now, and at this point, it’s likely that they will continue to see reasons to sell every time we rally. The European Union is very soft at the moment, and also has to worry about minor things like powering an economy!

It’s not until we start to see the US indices turnaround that we will more likely than not see the European Union recover. By European Union, I mean Germany. Germany is roughly 82% of the European Union, so this index will lead the rest of them around the continent, so even if you’re not trading this particular market, you should always keep an eye on it. At this point, it looks miserable.

The overall attitude of the market has been one that has gone higher, despite the fact that it is not necessarily a clean market right now

The West Texas Intermediate Crude Oil market has rallied quite nicely during the trading session on Friday as we continue to bang around in a major symmetrical triangle. You can see that I have clearly drawn this on the chart, and the uptrend line continues to offer a bit of resistance. It is worth noting that we are close to the highs from a couple of weeks ago, and at this point, if we were to break above the $111 level, it is likely that the market will continue to go higher.

In that scenario, the market would probably go looking to reach the $115 level, possibly even the $120 level. The market pulling back also makes just as much sense, because of the resistance that we have seen tested multiple times. If we were to pull back, that does not necessarily mean that is time to start selling oil, just that we may have to go looking for value yet again. The 50 Day EMA would be an area that you need to pay close attention to as it has been dynamically supportive more than once.

After that, there is an uptrend line underneath that comes into the picture as well, that is the bottom of the symmetrical triangle. At this point, the market continues to be very choppy, so you need to be cautious with your position size. However, it is probably worth noting that the overall attitude of the market has been one that has gone higher, despite the fact that it is not necessarily a clean market right now as far as a direction or trend is concerned. Notice that the 50 Day EMA continues to rise as well, and when you look at this chart, this is a perfect example of how people typically use moving averages, as it shows a slight “lean to the upside.”

If we were to break down below the uptrend line, which is essentially the $100 level, it is possible that the WTI Crude Oil market goes looking to reach the 200 Day EMA underneath. That would be somewhere near the $90 level, which is of course a psychologically important level, but it is also an area where we had seen a lot of noise back in February. Because of this, it does make a certain amount of sense that we revisit that area, but only if we get a sudden shock to the system. As things stand right now, it looks like it is much easier to go higher.

As far as buying the Euro is concerned, we would need to see a massive shift in attitude, and perhaps a break above the 50 Day EMA.

The Euro has fallen hard during the trading session on Thursday to threaten the 1.05 level. The 1.05 level of course is a large, round, psychologically significant figure, and an area that has been important multiple times. Because of this, it is not overly surprising that we stall in this area. If we rally from here, it is likely that we will continue to see plenty of pressure. The 1.08 level above is a significant barrier, and the 50 Day EMA seems to be racing towards it, which is yet another reason to think that the market will find plenty of sellers.

On a breakdown below the 1.05 level, then we are more likely than not will try to get down to the 1.04 level. The 1.03 level underneath is the bottom of the overall consolidation that we had seen previously, and therefore it is likely that we continue to be influenced by the previous action. Ultimately, I do think that we can get down to the 1.03 level, but it is going to be very choppy, and not very easy.

As far as buying the Euro is concerned, we would need to see a massive shift in attitude, and perhaps a break above the 50 Day EMA. Furthermore, the 1.0933 level is an area where we have seen a lot of selling pressure as well. If we can clear all of that, the market is likely to turn around and go much higher. That would obviously take a major shift in attitude from the Federal Reserve and of course the European Central Bank as well.

The market will continue to see a lot of volatility, and quite frankly I think that is going to be the norm in almost all currency pairs. The interest rate differential between the United States and Germany still dictates that we need to go lower, and of course rallies at this point should be thought of as value for the US dollar. Getting a little bit of a bounce should be thought of as a nice opportunity, but you should also keep in mind that the pair very rarely moves in one direction for very long, so it is going to be difficult to trade this directly off of the daily chart. However, I will not hesitate to use the one hour chart.

I like the idea of fading rallies as it gives a bit of value to what is the strongest currency right now.

The euro initially gapped higher to kick off the Monday session but has given back all of the gains to slam into the 1.05 level again. The 1.05 level is an area that should continue to attract a lot of attention because it is a large, round, psychologically significant figure, and the fact that it is an area where we have seen support and resistance in the past.

At this point, the euro is struggling due to a massive amount of problems in the European Union. The first thing would be that we could be looking at a serious lack of energy. That would destroy the European economy, and that could cause a significant amount of downward pressure on growth. The size of the candlestick is not necessarily crucial or impressive, but it does suggest that we still have quite a bit of negative pressure. Ultimately, I think that rallies will continue to be sold into as there seems to be no real hope of that situation sorting itself out.

The market rallying will offer a nice opportunity to pick up “cheap US dollars” at the first signs of exhaustion in this market. Ultimately, the market is in a very negative downtrend, and I do not think that is going to change anytime soon. That being said, you should keep in mind that the area below is going to be difficult to chew through, but as long as the Federal Reserve continues to be hawkish, it is difficult to bet against the US dollar. Furthermore, we have a Federal Reserve meeting coming out that people will be looking for a 50 bps rate hike at the least, and some are even starting to price in 75 bps. If the statement suggests that they are “on autopilot” to add 50 bps every meeting, that is going to continue to drive money into the greenback.

Economic numbers out of the European Union are very weak at the moment, and they do not look like they are improving. With all of that being said and the complete lack of risk appetite out there, I just do not see how this pair will change anything anytime soon. I like the idea of fading rallies as it gives a bit of value to what is the strongest currency right now.