Viking's FX-Market Update #9

In last week’s FX-Market Update #8 I took a look at the DXY and some of the USD pairs, so let’s follow up on that.

DXY
The US Dollar Index had a relatively good week but in reality, it was just closing where it open the week before. Indeed, it was the second week i a row we saw an inside candle i.e. price action was contained inside the range of the previous one.

So at large, not much has changed with the USD and it probably won’t ahead of Wednesday’s FED meeting and then Trump/Xi on Thursday. However, we already have some news hints regarding where the US/China story is going and if it lives up to the rumor it should benefit US and USD in the long run, but likely weaken the latter short term (except for against the Yen and possibly CHF) as risk is likely to suck up the first sugar rush.

AUDUSD
As you may know, AUD is not included in the DXY Index, so despite the latter was up last week so was the former, and the leaked US/China news last night has just underpinned that move higher in the pair, starting this week.

I have added an extra trendline on this chart, to show where trouble may show up if hesitation creeps in to the Aussie’s prospects.

It’s a bit tricky to count this structure from the bottom up, if it is seen in 5 waves, but a Leading Diagonal as wave (1) is the best choice imo based on how things look right now. Some kind of expanding diagonal could also be the case but there is not enough in place to make that call now.

Then of course, this things doesn’t play out as though, things go south in other words, then a corrective count is easy to attach to a structure like this. But just because it could be done, doesn’t mean it will be the right answer in the end, and right now things look promising for all so called risk currencies.

EURUSD
Not much ground was won or lost here last week, but the structure seems to miss the last wave of and Ending Diagonal completing wave 5 and as it seems the larger structure as a whole.

I wouldn’t dare to make a call, at this stage, where it may land in the end but anything between 1.19 and 1.25 seems possible although I think 1.20 to 1.22 have the best odds. Basically, it’s hard to judge what impact a favorable outcome of US/China talks will have on this pair, but as said earlier I think it will favor USD more in the long run.

That doesn’t exclude though, that USD bulls may be invigorated and throws wood on the fire, for a while…

GBPUSD
I warned last week about a possible Alt# (Alternative count) with wave 3 at the high and despite the pair was retreating last week, it did so in a corrective fashion and I now deem that count to be the more likely one to come true.

It doesn’t mean it’s all plain sailing here for the Pound, or elsewhere for the matter, but I thing the current changes in the geopolitical and trade environment will be more of a positive for the Pound, in relative terms.

USDCAD
This pair has become a real clown show and will probably not change for some time as the big kids make it out in the sand pit, but it hasn’t changed the bigger picture in any way.

Still on track for a larger ABC correction here where the Loonie most likely being the one taking most beating (together with the Yen but for other reasons) short term.

USDCHF
Remember the question mark (?) I left at the bottom nudge of last weeks chart, label it as a possible Alt# Primary wave 5 of cycle C? Of course, noting is confirmed yet and CHF bulls are always the hardest to convince of letting go, but I’ll stick out my nose already here and say “it’s it, the bottom is in”.

Ok, that may be more of a theatrical play and nothing I would or will trade on, and neither should you, but I have said it before the CHF has eaten so much crap the last year(s), more than its body is built to hold, and can crack any day now. It just need the right catalyst and the thickheaded CHF bulls are likely to contribute the coming (explosive) move as well as they may try to hold on to their lost cause.

Alright, that may have been something of a word salad, so let me put it this way - CHF is not Gold but it has basically been acting as if.

USDJPY
I will present you with 2 different charts/counts here. First the one I gave you in weekly format last week, but now in Daily time frame and zooming in on the ongoing contracting triangle structure.

That count is pretty much intact as it stands, but it builds on an anchoring of the upper trendline at the top, which is a point not really included in the triangle pattern. It’s just common to do this as it tend to setup a natural resistance where wave D may bounce back.

However, in the final triangle structure, the upper trendline will rest on wave B & D and if we do this trick there is already a cont that can be seen as complete. As the latest US/China news is likely to underpin the risk sentiment and it’s currency advocates, it will likewise also become an anchor dragging down the safe haven currencies, in due time.

Right now there is a battle to overtake the 153.276 high on the left, and so far it holds. Indeed, it should as there are no real confirmed news yet about US/China and more so, the upcoming FED meeting, and BOJ, are dark horses, not running wild but containing price.

USDCNH
It will be very interesting to watch USD vs the Yuan going forward, and honestly I have no idea how a US/China trade truce (or even more) will impact the pair, but I drew up a weekly count resting on the 2014 low, which give something of a megaphone pattern, or an expanding triangle if you like but I don’t count it as such because the waves don’t fit.

With all the overlaps, it should be counted as a corrective pattern though and currently a WXY combination seems to be the best choice. Guess I will come back to this.