Let’s look at the charts for the U.S. Dollar, Gold, Crude Oil The Stock Market and the Major Pairs.
Hello everyone, welcome back. My name is Greg Furhman, and this is the Forex Weekly Outlook for the week of June the 24th, 2019. Now, to get started this week, we’re going to begin where we always do, with that very important US dollar index. Now, this week has been a tough, tough week for the dollar. I think we all expected that, with the Fed. However, again in my respectful opinion only, the Fed is very, very confused as to which way they’re going. They gave the Bulls a little bit; they gave the Bears a little bit.
There’s a lot of talk and chatter throughout the forex market there’s going to be a half a basis point cut next month. I certainly am not in that camp. I’m not even sure I’m in the camp that warrants a single rate cut of any kind. But again, we’re going to have to see what the Fed does between now and the next FOMC meeting. But right now, the market is certainly taking it as a negative on the dollar.
What we can see here, the dollar is made a series of low or highs. We’ve had a major failure up here at this 97.80 mark. We’re moving lower. But where we’ve got to be careful right now, guys, is that we’re in these verified zones in this block. So right now, it would appear the dollar index is going to try and move towards our most recent low, our March low, of the 94.65 area, after losing this support here.
But I will point out again, I’m not sure if maybe the forex market is misinterpreting some of the things the Fed is saying, or adding words in there that aren’t there. And again, that’s only in my respectful opinion. So I will warn everybody that we’ve had a big push down, mainly on the Friday, down through this 95.89 area. But again, we’re very, very close. And we’ve got to be careful of bear traps down here. Because remember, globally everybody is cutting interest rates. I don’t think anybody’s talking about hiking.
So after the major market participants return to the market on late Monday or Tuesday of this coming week, they may have a very different view of what the Fed is doing here. So, right now, the indicators are pointing lower. We don’t have any signs of the dollar recovering for next week. But again, we’ve got to see how real money responds.
The Gold Market
With gold, the first thing I want to point out is that gold has been moving higher for a considerable period. But the main thing we want to understand here, guys, is that we’ve been here before. We’re going back to the September 2017 swing highs. We have not broken through this area. Gold looks very bullish. But again, a lot of different things have occurred this past week. We’ve had the Fed; we’ve had a conflict between the US and Iran that appears to be averted at this time, I’m not positive of that, but we’ll see. But right now, gold still has one more final hurdle to get above, which is to take out this 2014.30 area.
But I will point out also that we are moving in to somewhat of an overbought condition. And my optimism on a significant move higher in gold, prior to the fed actually cutting, I think the market may pause, and I would look for a retracement on gold, potentially back into this 13.65 area. And we can reassess there. But gold absolutely is bullish.
But I will further point out that this bullish move on gold, very accurately called on Vantage Point all the way back on May 30th. So anybody following the weekly outlook here or in the live training room has known that we’ve been positive on gold for quite some time now. That inevitably it’s likely the dollar is going to move lower and gold will move higher. That’s come to fruition. Now we have to see if this can continue.
In between all of this, we have our S&P 500 also coming up to a major swing high in this 29.64 area. We’re closing on a down day. The Vantage Point software, once again, the medium term crossing the long term predicted difference is warning us that this rally may not be what it appears to be. So we’ll look to see if we can break through 29.64, stay above 29.64, for at least a couple of days here guys. And if that happens, then and only then do we maybe have a shot at 3000. But my optimism on that at this particular time remains heavily guarded in an overbought condition near basically an all-time high and a yearly high.
Without any doubt, oil, as I’ve always stated, the intermarket correlation there: if equities go higher, oil goes higher. Now, the conflict in the Middle East has assisted this to some degree, but in most cases the seasonality is that oil is usually strong in the summer months, during the driving season. So again, this is still the norm here. So I would expect oil prices to remain firm, as long as we hold above 55.34, then we should see oil advance next week. We are moderately overbought here, at 84.4 on the predicted RSI. Predicted differences, again, a little bit overbought. But we’ve definitely got room to extend higher.
Forex Weekly Outlook for Major Pairs
Euro/U.S. Dollar (EUR/USD)
As we move into our main Forex pairs, starting with, of course, that very important Euro-US, one of the most heavily traded Forex pairs, when we look at the Euro, at first glance everything looks quite nice. Very comfortable, very cozy. As we break above this verified resistance, we have managed to close above it. But here’s the thing, guys: we do need to hold above this breakout point. Now, this breakout point, that’s coming in about 113.43. Again, we’re closing firmly above that. The medium term crossing the long term predicted difference, the neural index, once again, well ahead of this move. As it’s come to fruition, we’ve pushed higher.
Once again, we’re waiting to see what the ECB is going to do here. So this is really all about interest rates. But I will point out that the European economy is far from booming, to say the least. So once again, when we’re talking about some of these currencies, we don’t want to count the US dollar completely down and out just yet, when you’ve got the UK’s got issues, the Eurozone, Australia, New Zealand, Canada. All these other countries have the same issues or worse. So we don’t want to hang our hats solely on interest rates and whether the Fed’s hiking or cutting. We also want to look: is there real-world demand for the Euro? I would say yes and no. There’s demand for Euros at certain times of the month, the same as the US dollar. So right now, we’ve got some demand forming.
But again, I believe that a lot of this is going to be determined by gold. If gold continues to advance, the Euro will benefit from this. That is the main thing right now: we have a clear buy signal on this. So again, watch that 113.64 area very closely to see if we can hold above it in this coming week.
U.S. Dollar/Swiss Franc (USD/CHF)
The additional pairs, US-Swiss Franc, nine times out of 10 here guys, when gold strengthens, the Swiss Franc and the Japanese Yen also strengthen. But it’s rare that gold and the equities would be going up at the same time. So one or the other has to break free and clear here. What I will point out is that gold has broken out of the range, where the S&P 500 has not. So this would suggest that money will keep going into the Swiss Franc and the Japanese Yen, particularly while we’ve got a conflict in the Middle East. But if that conflict dies down, money will very quickly come back out of the Swiss Franc and the Japanese Yen. So we want to watch these areas very closely.
Right now, we are in an oversold condition. We’re approaching a major level of support. That level coming in at 97.16. Our RSI is already starting to flatten out, but our predicted differences and neural index are still down. So we’ll watch this one very closely, and I would definitely hold off until at least Tuesday before trading this particular pair.
British Pound/U.S. Dollar (GBP/USD)
With the Pound-Dollar, the Pound-Dollar has a very, very significant resistance area at 127.50. Now, another unique part of the 127.50 area is that’s also the yearly opening price. So if the Pound-Dollar can retake 127.50, close above it, then we’ve got a real shot at breaking free and clear of this area. But I would like to see us break free and clear of 128.10. Right now, our main indicators from Vantage Point very accurately calling this reversal off of this verified support zone. We’ve got our medium term crossing our long predicted difference. That followed, also, by, again, the neural index, with a rising RSI.
To begin the week, the area that we need to clear, to be very specific, is 127.50. And I don’t mean poke above it then close below it. I mean close clearly above this thing, break higher, come back, and retest 127.50. That will confirm a reversal, and we’re going higher. We don’t have that just yet here, guys. So, again, watch that area very closely. The Vantage Point indicators are supportive of additional longs while above 126.79.
U.S. Dollar/Japanese Yen (USD/JPY)
As we look at the US-Japan for next week, once again money is still going into the Japanese Yen in a quasi risk off scenario, with that Middle East conflict and of course the Fed. So when both of these things hit, it really is problematic for the US dollar, but very positive for currencies like the Swiss Franc and the Japanese Yen. So we’ll continue to monitor this one also, but again, we are in an oversold condition. It doesn’t mean it can’t go lower. But that’s why we back our charts out. And when we back our charts out, the most recent swing low past here is all the way down at 104.80. Now, I’m not saying we’re going to 104.80, but if a conflict between the US and Iran continues, it’s extremely likely.
Right now, we don’t have any real strong buy indicators to begin the week. So shorts, in my respectful opinion, still carry a slight edge, while below our T cross long at 108.43. So all eyes are on 108.43 so see if we can hold below this. But, looking at these key Vantage Point pivots, 107.55, 108, 108.43, watch all of these. But the first main level of resistance would be 107.55.
The Commodities Currencies
U.S. Dollar/Canadian Dollar (USD/CAD)
As we come into our three main commodity currencies in forex: US-CAD, Aussie-US, and New Zealand-US, a very similar picture. We’ve got US-CAD being pounded lower, while Aussie-US and New Zealand-US have aggressively moved higher, off the levels that I talked about in last week’s Forex Weekly Outlook.
Now, the minor issue I’ve got here with the US-CAD specifically is that we have been down here before. So when we look at this low, this February low is coming in at 130.68. Only a sustained break of that area will really send the CAD into a trending move. And I’m not convinced, at this time, that there’s enough meat on the bone from the Fed to push this thing lower. And I’m not convinced that gold is going to break above 14.30 if we no longer have a conflict in the Middle East.
So a number of different things to think about on the fundamentals side. But on the advanced technical side, we can already see that the RSI is starting to turn a little bit. Now, be very careful with this pair on Monday trade. Very often what it does is it continues its move from Friday and then reverses on Tuesday. So if we’re going to see a reversal on US-CAD, it’s going to be Tuesday morning. Don’t get too excited with going in on shorts per se on Monday, because again, be cautious of that.
One of the major advantages of the Vantage Point critical pivot areas like the T cross long at 133.47 is it gives us a retracement point, which is far superior to Fibonacci or any of these things. So we want to utilize that. If we click on our F8 and our Vantage Point software, an additional main pivot area, the long-predicted 132.84. If we hold below 132.84 by Monday and midday Tuesday, then US-CAD will likely make another leg down. But we need to hold under this particular level.
Australian Dollar/U.S. Dollar (AUD/USD)
With the Aussie-US and New Zealand-US next week, again, we discussed this in last week’s Forex Weekly Outlook. And I basically warned everybody of a bear trap down here down at this 68.63 area. We poked about 30 or 40 pips below that and then did a complete reversal. But you’ll also notice that the Aussie is stalling for two days in a row, despite the Fed and everything else, it’s having a great deal of difficulty closing above 69.26. So the indicators from Vantage Point have clearly warned us, before this upward move with virtually zero lag that this was going to happen. That’s come to fruition. But we’ve got to break through this particular area. If we can break above 69.26, our next upside target will be of course the 70.22.
But this area up here is the one that really has my attention in forex, up in this 70.40, 70.60 area. I believe if we can break above that, we’re going to have a complete and utter trend reversal on this particular pair. But again, we’re not there yet. Right now, we’re moving towards that, but we have a number of obstacles in our way.
New Zealand Dollar/U.S. Dollar (NZD/USD)
The exact same applies to New Zealand-US. You can see that we’ve got almost an identical signal, the medium term crossing the long predicted difference with the neural index, a rising RSI. New Zealand I would say slightly more bullish than what Aussie is, but the fact is, both of these have to get moving here very quickly, or the sellers are going to step back in.
Next week, we’ve got the US GDP, that’s going to be a big one to determine growth in the US, and it’s going to fuel further speculation on whether there’s going to be a rate cut or whether there isn’t going to be one. I think that a rate hike is off the table, even though in my respectful opinion it shouldn’t be. The Fed is, again, a very strange animal. So we want to make sure that we’re not hanging our hat totally on what we think they’re going to do.
With that said, this is the Forex Weekly Outlook for the week of June the 24th 2019.