EUR/USD
During the trading week, the euro tried to rally rather significantly, but it stimulated at the 1.1260 level yet again, as we have seen over the last month or so. All things being equal, this is a market that continues to watch the overall real rates in the United States outperform everything else.
As long as you get paid to hold U.S. debt well above inflation, it makes sense that the U.S. dollar will continue to see plenty of strength. A breakdown below the 1.10 level could open up further selling, perhaps down to the 1.08 level. All things being equal, if we rally at this point, I am more than willing to start shorting the euro.
NASDAQ 100
The Nasdaq 100 has rallied for the week, but it seems to struggle right around the 28,600 level. All things being equal, if the market can break above the 29,000 level, it would be very strong. But we have had a lot of volatility due to the real rates in the United States and the fact that interest rates have shot straight up in the air over the last several days.
Of course, the fact that Jensen Huang of NVIDIA has stepped down as CEO in a scandal for NVIDIA has also rocked the markets. Nonetheless, I still like the Nasdaq 100 and remain bullish.
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USD/CHF
The U.S. dollar has rallied significantly against the Swiss franc and is now testing a major area at 0.84. If we can break above here, then we could go much higher. But if we do not, then a pullback, for me at least, will be an invitation to start buying, as the market continues to pay you to hold on to U.S. dollars and the carry trade is very much alive.
Keep in mind that the Swiss National Bank has a zero-interest-rate policy that they are more than willing to enforce. I like this market. I am more than willing to go long on a breakout or those pullbacks.
GBP/USD
The British pound initially tried to rally but found resistance and then started falling toward the 1.32 level. There is a 50-pip, or perhaps a little bit longer, range of support underneath. But if we were to break down below the 200-week EMA at the 1.3120 level, then I think the British pound probably goes looking to the 1.28 level.
Keep in mind, this is about the U.S. dollar, not the British pound per se. Ultimately, I think this is a situation where we are testing to see whether or not we break down through massive support on the range that we have been in for over a year. But let us face it: most currencies have broken through support against the U.S. dollar.
USD/MXN
The U.S. dollar has been back and forth against the Mexican peso during the trading week as we have tested the 18.5 level and the 200-week EMA. If we break down below the 200-week EMA, we could see a deeper correction. This would make a certain amount of sense considering the interest rate differential.
But at the same time, real rates in America are healthy enough that it is causing a bit of an upward move. If the market were to break down below the 200-week EMA, then it is possible that we could see the dollar drop to the 18 level. But in this strong U.S. dollar environment, I suspect we see a lot of choppy behavior.
Gold
The gold market initially tried to rally but struggled at the $4,200 level, then turned things around and showed signs of weakness. The market right now, I think, will be watching the $3,850 level.
If we can break down below there, then gold could very well drop all the way down to the $3,500 level. With rates rising the way they are, and of course those real yields coming out of America, gold continues to suffer. I continue to look at this as a market you could be a seller of on rallies.
NZD/USD
The New Zealand dollar tried to rally for the week but then got absolutely annihilated, closing at the very low of the week as we threatened the 0.55 level. Giving that up would be catastrophic for the New Zealand dollar.
The interest rate differential right now certainly suggests that we could see that. Rallies at this point in time, I think, continue to be selling opportunities, as the New Zealand dollar and the New Zealand economy both are suffering at the hands of the global inflationary situation. Of course, New Zealand is so highly levered to Asia.
AUD/USD
The Australian dollar tried to rally for the week but then collapsed through support, and now we find it breaking through the bottom of the 200-week EMA. At this point, the Australian dollar looks extraordinarily sick. If you look at the consolidation area that we had been in previously, you could be talking about a 400-point move.
In theory, that would be 0.6450, which is an area that has been important in the past. So, technical analysis suggests that could be a move. All things being equal, rallies at this point in time I continue to short unless we get above the 0.69 level.
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