Forex for the week of April 15 – Gold Falters
The Japanese Yen
The Forex markets were indeed interesting this past week. The main thing that we noticed is that the XXX/JPY pairs all seem to be suggesting the same thing: that the Yen is oversold, and we may see a bit of a pullback in several markets. However, this isn't to say that we should be selling these pairs, just that a rest is probably about due. This being the case, the Yen pairs will be the most important pairs to watch – and that is the key word: WATCH. There are several places that could offer support, and there are a ton of traders that have simply missed out on this rally. There will certainly be plenty of people wanting to get involved in what over time should be a “one-way trade.” Below is the EUR/JPY weekly chart:
Gold falls apart
The gold markets have been testing serious support over the last several weeks, but finally broke through the $1,500 level on Friday. The serious breakdown of this market shows just how much overall US dollar strength there really is. The gold market in Dollar terms is falling apart, but when it comes to the Yen, we are still making new highs. This just shows just how differently these two currencies are viewed at the moment. However, as most of you will be trading the gold markets in Dollar terms, this is what you need to know: We are now officially in a bear market for the year. This means that we have lost 20% in the price of gold this year, and we haven't even finished the first four months! Below is a gold chart showing the breakdown of the market through $1,500 – a place that we see as vital for support:
Bank of Canada
The Bank of Canada will have a monetary policy meeting on Wednesday, and this could be a mover for the USD/CAD pair. The pair has been grinding slightly lower over the last few weeks, settling just above the 1.01 level at the close this past Friday. The pair seems like it is trying to wind up for a larger move, and we must admit surprise that the oil markets have fallen so hardly lately, while the CAD has gained a bit. This is a bit backwards, so watching this will be interesting. The words of the release will be parsed, and traders around the world will look to it for directionality in this market.
