Dollar appetite is still the name of the game this week since there are only a few major reports to distract traders from trading last Friday’s weak NFP and easing concerns regarding a possible attack on Syria.
This is probably why EUR/USD is up despite the escalating tensions in Italy. Even GBP/USD is riding the anti-dollar wave (hurray for my long GU trade!), especially after the U.K. struck jackpot with a triple upside surprise in PMIs last week. Meanwhile, better-than-expected reports from China and Canada are giving momentum to comdoll rallies, as seen in AUD/USD, USD/CAD, and NZD/USD. Will the currencies keep up their strength though?
Possible game changers such as the U.K. and Australian employment numbers, the RBNZ’s rate decision, Draghi’s speech, and the U.S. retail sales data won’t be out till later this week, so currencies will most likely continue trading along their intraweek trends over the next trading sessions.
USD/JPY: Cautiously Bullish
I’ve been looking at USD/JPY’s 100.00 level for a while now, but I only just noticed that it’s also the top of a rising channel on the 4-hour chart. The level could become a support if the pair makes new intraweek highs, but I’ll also keep an eye out for a trip down the channel in case the dollar continues to weaken across the charts.
This is the setup that I’ll most likely take. For one thing, EUR/USD is finding a hard time making a convincing break above the 1.3250 handle. Oh, and it’s also near a former support AND a possible 50% Fib resistance! What do you think? Time to jump in?