Currencies Weekly Commentary
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EURUSD
We saw a significant drop in the EURUSD last week, invalidating our retracements pools I was hunting for. However I was still be able to get some broken support level entries. We can see a 20% increase in open interest last week suggesting plenty of short taking on the euro, while a sudden jump in volume suggesting interest in shorting the euro.Volumes peaking and slowing down explains the correction on the EURUSD this week but could also signal an opportunity to stalk another fall lower in the euro has buyers fizzle out and another selling round begins. COT data suggest nothing much has changed from last week, commercials have increased long positions.
With Regards to the dollar, we saw record highs last week, with moves higher with little or no breathers in between. not surprising that we have seen a slow down this week, with the market waiting for the FOMC interest rate announcement tomorrow. Technically we have seen inflating volume in the DXY market with a slight increase in open interest as compared to the the huge jump in the EURO. I have no idea why the open interest is slightly affected despite the rocketing volumes. COT analysis suggests the bullish trend is still strong with Commercials incrementally increasing short positions.
The GBPUSD AND EURUSD long term correlation is holding however this week we noticed a break in that correlation on the intra day level, however the FOMC meeting influenced a snap back to correlation after interest rates were left constant at 2.50.
Looking into the bond markets that remain at very low levels, US 10 year still remains as the highest yielding to date and German yields still doing extremely poorly yielding at 0.25. Noticeable on the chat is the sudden upward shift in the Japanese bonds but seemed to have corrected is correlation with the rest. With such low yields, bonds still remain a poor indicator of currency flows with flourishing equity markets. conversely it would mean that if bond yields are soo low than the bond prices are at record highs, suggesting a bubble in this market as well.
This weeks support and Resistance levels are shown in the purple lines as usual. we can see the support level held apart from the disastrous wicks that blew through, Price objective would be next resistance level at the 1.0500 level.








