My view is that the USDOLLAR bounce is counter trend but it should carry higher before rolling over. The upper parallel of the Schiff fork is a candidate for resistance along with the 61.8% retrace of the decline from 5/18 at 12428. Watch for support from 12304 (more or less now).
Finally something else besides ‘melt-up’. Index action in 2020 is basically straight up or straight down. Once the market picks a direction, it goes quickly in that direction without much of a counter reaction. In ES, pay attention to 2976 for a bounce. If it does bounce, then note 3065 for resistance. IF a larger reaction materializes (which would be a change) then 3137 should provide resistance.
The US dollar advanced against risk-sensitive currencies including the Australian dollar, New Zealand dollar and Canadian dollar in early trading on Thursday. The move came after a gloomy economic forecast from the Fed and reports of rising coronavirus cases in the US.
QQQ is running into lines that extend off of highs over the last 9 years. A close-up view is below. The red line extends off of the December 2014 and March 2018 highs. That line was resistance for the August 2018 and February tops. It was reached today. The line that originates at the February 2011 high is slightly higher…about 251.70 in QQQ.
Stephen Roach, former Morgan Stanley economist and currently employed by Yale, published A Crash in the Dollar Is Coming yesterday. He may be correct but these types of articles are usually published at near term price extremes (in this case a USD low). Technically, this is the perfect spot (December low) for a bounce. Also, DXY made a slight new low today but EURUSD did not make a new high. This non-confirmation is typical at turns. Back to 98.27 or so wouldn’t be a surprise. Finally, consider the extreme short term sentiment readings (DSI readings from Monday) in front of FOMC on Wednesday. The narrative heading into FOMC is that there is no limit to the Fed’s balance sheet. What else can they say that would ‘surprise’ markets in that direction? Risk for tomorrow seems like a classic ‘sell the news’ event.
Gold edged higher in early Tuesday trading, lifted by a weaker US dollar as investors eye the Federal Reserve meeting set to conclude on Wednesday. Meanwhile, inceased risk appetite and robust equity markets threaten to keep a lid on the yellow metal's price.
USDJPY plunged today. Price could bounce from the lower parallel of the short term fork near 108.00. Proposed resistance is the year open and center line at 108.75-109.00. Seasonal tendencies have turned down and the rally from the May low is in 3 waves. The implication is that the rally is complete as a correction and that price is headed for a break of the May low of 105.99.