Hey Guys,

Just when we thought the USD was ready to rip, Fed Chairman Janet Yellen has decided to send some mixed messages to the markets on the future of interest rates. Only last week we saw the FOMC suggest that interest rate hikes were going to be coming hard and fast. Then yesterday Yellen said that raising rates gradually is the appropriate strategy.

Whatever the thinking might be, it looks like the USD is starting to turn around and it’s about time after an extended downtrend.

Elsewhere the safe-havens gave back the gains like we suggested that they might. The North Korean saga had put a bid under assets like Gold, however, when the dust settled, traders realised there wasn’t much substance to the hype and markets sold back off.

Now that the North Korean drama has slowed down (for this week at least), we can get back to focusing on some technical setups.

Top Economic Events

A quiet day on the European Economic Calendar, however, there is some top tier data out of the US due for release.

USD – Core Durable Orders is out at 12:30 GMT and analysts are predicting a reading of 0.2% which is a slight decline from the previous month.

USD – Pending Home Sales is out at 14:00 GMT and analysts are predicting a slight increase to -0.5%, albeit still a negative reading.

EUR/USD – The Euro is Breaking Down

I’ve been bullish on the EUR for some time, however, there cracks are beginning to appear. That goes hand in hand with a strengthening USD on the back of the FOMC update last week suggesting rate hikes are coming faster than expected.

EUR/USD – Daily Chart

Key Levels

EUR/USD – Trading Plan

It looks like we’ve formed a head and shoulders pattern on the daily chart. We’ve already broker through a key support level at 1.1850 and I’m thinking that we have the potential to now move towards the 1.1700 level which is the natural downside extension of the head and shoulders pattern.

Gold – Back Down to Earth

Yesterday I spoke about how I suspected the safe-havens might be in for a retrace. That appears to be the case, as markets are slowly getting tired of the North Korean commentary.

Gold – 240 min Chart

Key Levels

Gold – Trading Plan

1300 has been a big level in gold for some time. I’m prepared to use it as a key resistance level and sell spikes through that level. Again be cautious of any fundamental changes that can cause a dramatic change to the geopolitical outlook.

I feel that we are building some momentum with the USD and that might just hold us in good stead to identify some great trending opportunities as they come up in the near future.

Best of luck today!