Dollar continued it’s mighty rally today but the strength is slowing down. Better than expected PMI news from Europe couldn’t even bring the EUR/USD up. But although the dollar finished the week off strong and healthy, remember that all good things must come to an end. USD/CHF ,which has a similar behavior to the dollar index, is at a resistance and EUR/USD is touching a strong support at 1.09. The dollar is strong, but the Fed’s will probably announce a no rate hike this month and traders know that. I’m definitely expecting a bounce from the EUR/USD next week and expect a dollar pullback.
Interesting set up on oil and I’m holding my shorts for USD/CAD as I speculate a rally in oil next week. First off, oil has touched a very strong support line; the same one that pushed it up a couple week ago. Secondly, a dollar pullback is most likely to come after strong rally, and most importantly Hurricane Patricia is coming toward Mexico and is looking ugly. According to CNN, “(CNN)Hurricane Patricia, the strongest hurricane ever recorded, made landfall at 6:15 p.m. (7:15 p.m. ET) on Mexico’s southwestern coast near Cuixmala with 165 mph winds, the National Hurricane Center reports.The Category 5 storm has been described as potentially catastrophic for those in its path.” This hurricane is no joke and will probably affect Texas as well which would definitely affect oil prices. Fundamentals and technicals are both showing bull for oil, which is why I’m holding my USD/CAD shorts for the weekend.
Price is touching the same area where oil previously rallied. Funny how Hurricane Joaquin helped oil pop last time, this time it’ll be hurricane Patricia.