The Tiger Forex Report – Week of 5/1 – 5/5/2023

The DXY is consolidating as major FX pairs show that they have minds of their own. There is no slowing down the divergence factor.

Crude Oil bounced setting a critical swing low last week. Key off that level for direction. The gap has been filled, and a big range trade may be the most likely outcome.

30yr T-Bond is wedging, and set for a move. The next Fed meeting should post another .25% rate hike, and our expectations is that Hawkishness will continue.

EURUSD Weekly Outlook:

This market is a weak Bull flirting with newer move highs by a slim margin. Until the Fed meeting is over there probably will be very short-lived opportunities. It would be advisable to wait for a strong signal, or until after the Fed meeting before heavily trading the EURUSD. Trading below the upside breakout level keeps this currency in limbo. If there is a surge in USD strength, then there may be a nice sell off. The downside target zone is all that is expected for a correction lower. Only a failure from the downside breakout level would reverse the outlook to very Bearish.

If the EURUSD can get a close above the upside breakout level, then the Bulls may have a good shot at pressing newer move highs up towards the 1.1210 level. Trading above here will be tough unless the Fed shows signs of stopping the Hawkish campaign. Should this occur, it would reinforce the ECB’s efforts, and thus give more lift to this currency. 1.1325 is the extended upside objective.

GBPUSD Weekly Outlook:

Of the major FX pairs, the GBPUSD is busting out to the upside. Trading is holding strong above the upper range trade resistance level. A follow through rally is likely to press new highs up towards the 1.2630 level. With the Fed meeting this week the Bulls may be held back until after Wednesday. The UK economy is in shambles, and the BOE is primed for another hike. Theses factors are helping to support the trend. 1.2760 is the long-term upside target.

Trading under the upper range trade resistance level sets the GBPUSD up for a break that targets the downside correction zone. If the GBPUSD falls back into this area the market will set the stage for a rough range trade over the next couple of months. If there is a failure from the 1.2128 level then the Bears should set off fresh selling pressure that targets the 1.1840 level. Let us see how the markets react to Wednesday’s rate hike.

USDCHF Weekly Outlook:

The trend for this market remains an aggressive Bear, but is a turn in sight. There is a potential Double Bottom on the Daily chart. Use the downside breakout level for direction. Trading above here has the USDCHF looking at the critical downside resistance band. This is a key area. Use caution fighting a rally above 0.9019. A breach of this level is likely to touch off fresh buying for an extended leg higher towards the upside target zone.

A failure from the downside breakout level is an indication that the Bears are looking to test the 0.8780 level. The long-term trend is very strong, and is expected to continue for months to come. If there is a big sell off in the USD after the Fed meeting then the USDCHF has the potential to reach 0.8650 before settling down. Of the major FX pairs verses the USD, this one is very likely to beat down the USD. In the event of a strong USD move it is not likely that this market will pull back very far.

USDJPY Weekly Outlook:

There is new leadership at the BOJ, and there are many theories as to what they will do next. However, it is not likely that they will do anything to significant. The critical breakout last week is what should be the focus this week. Another run at resistance is on the menu, and a challenge of the upside breakout level this week is likely. With the Fed most likely raising again the USDJPY Bulls have some very nice upside potential. A breach of 137.99 targets 141.88 level. Watch yields. If there is a big sell off in the interest rates this week, then be careful trying to fade Bullish momentum in this market.

If the USDJPY pulls back this week the downside correction zone is expected to hold firm. Only a failure from 132.21 confirms Bearish strength. Trading below this area will put the market into limbo as it chops around on support. If yields start to pull back this week, then the Bears may muster up enough momentum to make a move towards the downside breakout level.

AUDUSD Weekly Outlook:

Talk about a market that is up for grabs. The BOA is under siege. Two new added members, and a consensus that wants to fire the rest. This weighs heavily on the AUDUSD, and it is not likely to change for a month or two. Last weeks low is a critical support level. A failure from here confirms the markets intentions to slam support down towards the 0.6495 level. Be careful trying to fade this slide. Aussie traders should remain in a sell rally posture. Rallies will be viewed as corrections in the short-term outlook. And if yields start to rise sharply in the U.S., then this currency pair could reach 0.6250 before there is a bounce.

If the AUDUSD can sustain a trade above last Thursday’s low, then it will be a grind of a range trade while the market tries to digest fundamentals impacting this currency. A breach of the upside breakout level is necessary to confirm a short-term change in trend. This would gear the Bulls up to make a run for the upside target zone. Remember that the market is in a sell rally forecast, and this area should put a halt to any major Bullish surge in momentum.

NZDUSD Weekly Outlook:

A higher move low, and a close just under the 0.6187 sets the NZDUSD up for a challenge of critical resistance. The overall outlook is Bearish for this market, but right now the Bulls have control. A challenge of resistance up to the 0.6280 level is the call. If the Bulls are going to press a correction to the upside a close above 0.6280 is needed. If this occurs, then an extended rally that targets 0.6377 is expected.

Last weeks Low holds the NZDUSD afloat. A failure from here and all bets are off to the upside, and a test of the downside breakout level is expected. Trading below 0.6084 targets the 0.6010 – 0.5985 support band. New Zealand is bailing on its ally the U.S. for the BRICs. As this new development unfolds it is probably going to keep this currency suppressed versus the USD in the short-term. Another negative influence on the market is the weak AUD. This trade zone is in a state of flux, and should remain so for the next couple of months.

USDCAD Weekly Outlook:

Traders really had their ups and downs on Friday. A short-term high was established. Key of this high for direction. Trading below here keeps the Bears in control pressing support towards the downside target zone. Watch yields. If yields pull back then the bearish momentum is likely to build. This extends the downside objective to the downside breakout level. 1.3175 is the longer-term sell off target.

If the Bulls can take out Friday’s high, then all Bearish bets are on hold. Trading above this level targets the 1.3809 level. But use caution back at these levels. This has been the area keeping the USDCAD at bay. Remember that this currency has been very range bound. Only a close above the upper range trade resistance level confirms a new move higher that targets the 1.3910 level. If yields start to rise sharply, then this would help to shore up the trend, and help end the long-term neutral outlook.