Will This Support Hold?
Bo Harvey,
Dave Floyd’s colleague, will be standing in for Dave on Mondays.
Last
week saw several currencies find bids against the
dollar at
key support levels. However, given that they haven’t yet bounced
substantially to the upside, the question remains whether this support will
hold. In light of the Fed meeting coming up Tuesday, it’s my suspicion that the
market will remain quiet until then, at which point the action could unfold
either way. Expectations that the Fed will have to tighten soon have been
creeping higher, and so the wording will be especially scrutinized by market
participants for hints into the Fed’s bias. The unemployment rate is due to be
released Thursday as well, which could be the catalyst for action if the Fed
meeting fails to play the role.
 
Ten
year yields continued higher last week, creeping into overbought
territory along with tagging significant confluence resistance zone on the
weekly chart. Be prepared for a short-term pullback in yields, i.e., a bounce
in bonds, before a resumption of the longer term trend.
The
metals stocks (XAU) continued to get hammered and tagged the first of
two potential target levels outlined last week, at 81. If 81 gives way, then be
prepared for a move toward 74-78, which contains confluence of several
significant support levels that could very well provide an intermediate-term
base in the metals.
 
With key releases due out this
week and critical levels so close, this week could provide some decent moves
across many markets, including hints as to whether the bounce in the dollar is
near over or will lead to a breakout of the downtrend channel.
Have a great trading week,
Bo Harvey
bo@aspentrading.com  Â