This week will be very divisive for the future of USD, JPY, EUR. The central banks pertaining to these currencies are going to shape the path going forward. One thing is for sure, the markets will be volatile, and there are a handful of factors to consider as we start this week off.
This pair has been up among the top buys on the EdgeFinder for months now. The trend clearly reflects that, and retail is poised to attempt a downside play that has simply not come yet. The crowd is now over 80% while COT tells a different story. The yen saw another decline in the number of long positions going into this week.
This Thursday, the BOJ will announce a pivotal decision regarding the strength of the yen. Forecasts say the bank will keep rates unchanged at below 0%. Because of their history of keeping an ultra dovish policy, that might continue regardless of the rising inflation in Japan.
Gold still sits at a +4 buy from the EdgeFinder readings. The recent downtrend and AUD and CAD funds rate decisions have put pressure on the metal for the time being. However, all of that may change this coming Wednesday when the Federal Reserve makes their move on the dollar. Expectations call for a pause which could prove bullish to the metal if fulfilled.
On the 1D timeframe, this pair has come down to test support on a long term trend line which price has held. Several attempts have tried to push the metal lower, but it continues to stick to the demand zone. COT also showed continued interest to the upside mostly from the decrease in overall short positions on the pair.
Another currency looks promising against the yen. EURJPY is sitting at a +4 buy as one of the most shorted pairs on the retail side while most bought by smart money. Both countries are dealing with their own issues with inflation. The ECB is the only one of the two banks that is doing something about it, however.
This Thursday will be an eventful day for the pair as both banks will announce their new interest rate on that day. If we get what was expected, the EUR will continue to be hawkish while JPY will remain the least wanted currency on the market.
Here's an overview of crowd sentiment surrounding the majors, indices and commodities. Now it looks like most retail traders are long USD, mixed gold and bearish stocks. Very interesting positioning as USD is expecting to witness some dovish sentiment going in to the Fed meeting this Wednesday.
Smart Money Spotlight
Meanwhile smart money is increasing their bullish sentiment on the stock markets, keeping a bullish outlook on gold, looking dollar mixed, euro bearish and desecrating the yen. The chart at the bottom shows an increase in the net long bias on gold which is now the most bullish sentiment we have seen from smart money since May 1.
Here are the European forecasts of short term interest rates on the left and inflation forecasts on the right. Investors are expecting one more rate hike this Thursday to take EUR to 4% before hanging there for a while. At the same time, inflation is expecting to come down a good bit from the 6% range and near 2% by Q4 of next year.
So, investors are expecting a more hawkish euro while a less hawkish dollar and a dovish yen.
AI- Generated Trading Setups
AI-generated bullish/bearish bias setups on forex currencies, gold, & indices.
GDP numbers came in lower than expected in the US, marking the third straight drop in economic output. This is usually good news for the stock market indices and gold, however, bond yields continue to hold up above 5.1%. Here are some potential trade setups for both dollar and index longs depending on how the […]
Hi, I’m Nick! I am the founder of A1 Trading, market analyst, YouTuber, and creator of the EdgeFinder software tool. I caught a huge winner on USoil with the help of the EdgeFinder! In this article, I’ll walk you through my thought process behind the trade and how I found this crazy runner! Finding My […]
Last Friday's report showed a significant change in global market sentiment from smart money. What COT signaled has turned ultra-risk-off for traders who have been hoping for Fed fears to subside. This news could spark up worries about higher interest rates for the long term. EdgeFinder Analysis GBPUSD is now a -12 on the EdgeFinder […]
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here