Weekly Forex Forecast (15/07/24) EurUsd / XauUsd + Forex Trading Plan! [HD]

Summary

In this weekly Forex forecast, the speaker discusses the impact of soft US CPI data on the dollar, predicting continued selloff and potential pre-flight to safety. They highlight the Japanese Yen's potential reversal due to intervention, and suggest trading strategies for various currencies, including the Swiss Franc, New Zealand Dollar, and Pound. They also provide insights on commodities like crude oil, gold, and silver, focusing on potential long opportunities.

Takeaways

• 📈 The US CPI data released last week was soft, leading to increased volatility in the dollar and a significant selloff in the DXY on Friday.
• 📉 The combination of softening CPI and a widening unemployment rate in the US could signal a weakening labor market, potentially indicating the end of an economic cycle and a move towards recession.
• 💔 The 2-year yield falling could cause the dollar to sell off, which is often followed by a flight to safety, impacting the currency market dynamics.
• 💼 The Japanese Yen has been at the bottom of performance metrics, but recent soft CPI data and potential intervention by the Ministry of Finance in Japan might lead to a reversal.
• 💵 The US dollar is expected to continue its downward trend in the short term, with a focus on the potential for a 3 to 5% sharp selloff.
• 🌐 The Swiss Franc, New Zealand Dollar, and Canadian Dollar are highlighted as the top short ideas, while the Pound, Euro, and Australian Dollar are favored for long positions.
• 📊 The Australian Dollar, despite recent outperformance, is showing signs of weakening performance metrics, suggesting potential for a decline in the coming weeks.
• 🛑 Crude oil is favored for long opportunities, with a focus on buying at the lows and looking for a breach of certain support levels for confirmation of a reversal.
• 💰 The speaker is bullish on gold and silver, expecting support from a potential continued selloff in the dollar, which could benefit these commodities.
• 🌐 The ECB meeting next week could impact the Euro and related currency pairs, with potential for low volatility leading up to the event and significant movement post-decision.

Q & A

What was the significant economic data release that impacted the dollar last week?

The significant economic data release last week was the US CPI (Consumer Price Index), which came out softer than expected. This led to increased volatility in the dollar and a notable selloff in the DXY (US Dollar Index).

How did the US CPI data affect the dollar's performance?

The soft US CPI data led to a selloff in the dollar, causing the DXY to drop significantly. This indicates that inflation is coming down, which can be a sign of a weakening labor market and a potential indicator of an economic cycle nearing its end.

What is the relationship between the US unemployment rate and the dollar's performance?

An increase in the US unemployment rate, combined with falling inflation, can signal a weakening labor market. This can lead to a selloff in the dollar, as it suggests economic pressures that might be precursors to a recession.

What is the significance of the 2-year yield falling in relation to the dollar?

A falling 2-year yield can cause the dollar to sell off. This is often a precursor to a flight to safety, where investors move away from riskier assets, including the dollar, in anticipation of economic uncertainty.

What is the potential impact of a continued sharp selloff in the dollar?

A continued sharp selloff in the dollar could indicate the beginning of a pre-flight to safety mechanism. This could lead to a short-term decline in the dollar's value, followed by a potential sharp reversal as investors seek safe-haven assets.

Why is the Japanese Yen considered a potential short opportunity?

The Japanese Yen has been at the bottom of performance metrics, and recent soft CPI data in the US has led to money moving from the US dollar into the Yen. Additionally, the Ministry of Finance in Japan may have intervened to strengthen the Yen, suggesting a potential reversal in its performance.

What are the top three short ideas for currencies mentioned in the script?

The top three short ideas for currencies mentioned are the Swiss Franc, the New Zealand Dollar, and the Canadian Dollar.

What is the outlook for the Australian Dollar in the script?

The Australian Dollar has been performing well, but there are signs that its performance metrics are slipping. This suggests that while it has been a strong currency, there might be a potential for a decline in the near future.

What are the key factors to watch for in crude oil trading next week?

Key factors to watch for in crude oil trading next week include potential pullbacks, testing of support levels around 80.2361, and the possibility of a one or two-day reversal to the upside. Traders should also look for a breach of this support level as a signal for further action.

What is the strategy for trading the Pound against the Swiss Franc?

The strategy for trading the Pound against the Swiss Franc involves looking for pullbacks and potential breaches of certain support levels, such as 1.115166. Traders should consider a one or two-day reversal to the upside as a key setup, and also watch for potential bull flag setups.