The Tiger Forex Report – Week of 5/29 – 6/02/2023

Can the DXY Bulls hold the trend intact? Recent market action seems to confirm short-term strength if Yields continue to press towards higher levels.

Crude Oil is stuck in limbo. Demand is not decreasing, but back room deals by the Middle East are. This may be holding prices down as countries look to dodge sanctions and other mandates by the West.

30yr T-Bond traders may be in for a rough couple of weeks as we head into the next Fed meeting. Yields may be ripe for a sideways consolidation trade until then. Lower move lows are expected for the long-term outlook for this market regardless of what the “consensus” is.

EURUSD Weekly Outlook:

The EURUSD has fallen into a good support area, and there may be some sideways trading action ahead. Be careful about direction until the June Fed meeting. It is doubtful that we will be settling into summer time markets, but a range trade is not out of the question. Bears should look to keep their Stops tight, and lookout for some head fake rallies. Only a close above 1.0737 confirms strength for a short-term rally back towards the critical resistance band. This is all that is expected out of a rally, unless the ECB pulls the trigger to hike rates in an extreme way.

Trading in the downside target zone is going to be tough. A failure from the 1.0638 level is needed to confirm extended weakness. If U.S. Yields catch a strong bid, then the EURUSD Bears have the potential to slam new move lows towards the 1.0475 level. Yes, that is a big gap to the downside. But remember that Yields are much lower than they were six months ago…And how many rate hikes have we had for the USD??? There is room to the downside no matter what the ECB does.

GBPUSD Weekly Outlook:

The GBPUSD put the breaks on the recent downside momentum on Friday, but the short-term trend is still a Bear. Key off USD strength. If the DXY can hold the Bull trend, then the Pound is likely to get knocked back a bit more. The downside correction zone is still the focus for the current trade, and the market remains in a sell rally forecast. Trading back in that area would be a good spot for a consolidation trade to develop. We are coming into a Fed meeting, and trends are likely to come to a directionless halt as we get closer to the Fed release.

Only a violation of the upside breakout level confirms the Bulls are trying to reverse the trend. It will be a fight though. The critical resistance band will be tough to breach. This is a critical area. Do not fight a rally above this area. Fresh buying is likely to build, and drive the GBPUSD up towards the 1.2720 level.

USDCHF Weekly Outlook:

Of all the FX pairs against the USD, the USDCHF is the most resilient. The trend is your friend, but the Bulls are not going to have an easy time getting to the upside correction zone. Higher move highs are still the call, but expect it to be a grind. Also expect the market to fall back on support constantly before inching a new swing high into place. Only a rally above the upside correction zone confirms enough long-term strength for the Bulls. 0.9431 is the extended long-term upside objective.

If U.S. Yields start to pull back, then expect the USDCHF Bears to react fast and hard. The downside target zone is a very viable area to hit if there is a short-term shift in momentum. Below here it will be touch and go until after the Fed meeting. It is very unlikely that the market will get lower than this area until there is a big drop in Yields to justify it.

USDJPY Weekly Outlook:

And this market is off to new move highs. The BOJ needs to say or do something to slow this Bull down. With the Fed meeting ahead soon the USDJPY Bulls are taking full advantage of the potential for new multi month highs over the next month or so. All trading above the critical monthly directional pivot level targets this currency pair up towards the 142.25 level. It is a buy break forecast for the market until there is a big fundamental shift.

Trading below 139.62 is needed to negate the strong Bullish outlook, and set the USDJPY up for a break that targets the downside correction zone. This is all that is likely do to the long-term strong Bullish influences on this FX pair. Until the BOJ does something very drastic this outlook remains very firm. The Fed could alter the outlook as well if they announce a pause in rate hikes for a few months. However, this is not likely to happen until early next year. Then they will help the president out by possibly even cutting rates before the 2024 election. Remember you read it here first.

AUDUSD Weekly Outlook:

AUDUSD traders need to key off last Friday’s low. Trading above here will be tough because of the sell rally forecast. Watch to see how DXY moves this week. If the Dollar Index pulls back, then this currency has a chance for a bounce. The upside correction zone is all that is on the agenda for a higher trade. Fundamentals are just too horrible for this market. Only a close above the upside correction zone confirms strength for a challenge of the upside breakout level.

Do not try and catch a falling knife. Trading below Friday’s low is a negative indication that the market will slam new move lows towards the 0.6358 level. This may seem extreme, but if USD strength kicks up its heels into the Fed meeting it is a very plausible scenario. If you are not a Bear, then wait for a strong Buy signal before trying to fade this trend. This currency overall is a dog with fleas. Use caution.

NZDUSD Weekly Outlook:

Well, there is not much to be said here. Use the directional pivot level as your guide. Trading below here will keep the currency hard pressed slamming newer move lows. As our pseudo ally cozies up to the BRICs’ it does help solidify weakness for the Bear trend. As we get closer to the Fed meeting this market will most likely settle into a consolidation phase before falling on support again.

Trading above the directional pivot level will be a grind. If the U.S. Yields were to pull back sharply, then the NZDUSD Bulls would get a boost. The upside correction zone for now is all that is likely out of a bounce in the market.

USDCAD Weekly Outlook:

USDCAD Bulls are pressing a critical swing high. Watch Yields and the DXY for a key to direction. Strong U.S Yields and a strong USD should help the Bulls continue to press newer move highs up to the upside breakout level. This is the hurdle to cross. Trading above here would set the Bulls up for a surge of fresh buying to extend the short-term trend to higher levels.

There is a Fed meeting ahead of us, and the DXY may fall into a range trade. If this occurs, it will likely put the breaks on the recent USDCAD Bull. A sideways trade will be a grind especially if this market falls back into the consolidation range area that it has been trading in for months. Not much of a surprise since over all this market has been in a long-term holding pattern for quite some time now.