In the latest Forex Weekly Outlook, we change things up a little to look at some of the key intermarket correlations associated with the IDX and the major pairs. Understanding these intermarkets are important in determining how a given market may move for the week.
Forex and the U.S. Dollar
The U.S. Dollar Index ended last week with four straight bearish days. But, there could be a bottom forming around the 99.500 mark. The key intermarkets to keep an eye on are the global equities. These markets are often highly correlated and a move on the equity markets like the SPY usually acts as a leading indicator for things to come in the IDX. Oil seems to be directly correlated with the IDX of late while gold is inversely correlated.
Forex Weekly Outlook for Major Pairs
Euro/U.S. Dollar (EUR/USD) continued to see growth amid a bull trend that has been in place for the last few weeks. The market closed last week around 1.0775. Some of the key intermarket relationships to focus on is the indirect relationship with the global indices and the IDX. Traders should also pay attention to gold as it is 100% correlated with the EUR/USD pair. For example, we see a potential top in place for gold, which could mean we see a similar trend move for this pair.
British Pound/U.S. Dollar (GBP/USD) also has a bull trend that may have hit a top after back-to-back days closed last week just under the 1.2500 area. One of the key determining factors is the relationship with EUR/GBP. As this pair moves higher, GBP/USD receives downward pressure. Oil also strongly affects the GBP. As oil slides so does the pound, which makes GBP/USD move higher. The USD/CAD currency pair is also inversely correlated. As both pairs seem to have hit a plateau, we could see movement this week out of both markets.
U.S. Dollar/Japanese Yen (USD/JPY) saw a bullish Friday put an exclamation point on an otherwise bearish week. VantagePoint indicates the bear trend has been in play for over a week as the market has dropped from near the 115.00 mark down to the 111.500 mark that was the close on Friday. One of the big influential markets for this pair is the direct correlation with the Nikkei225. There are also key inverse relationships in play with the Hang Seng and gold.
The Commodities Currency of the week
Australian Dollar/U.S. Dollar (AUD/USD) is heavy influenced by the gold market. As gold moved up over the last two weeks, so did AUD/USD. But, the pair ended last week on a bearish note, closing around 0.7625. We also see a considerable inverse relationship with another commodity currency pair in the USD/CAD.
The Forex Weekly Outlook is designed to help traders remain aware of intermarket correlations of global market relationships. You can become more profitable if you know how to get ahead of the trends and understand these relationships can potentially expand your portfolio. Utilizing the predictive indicators and intermarket relationships in VantagePoint Intermarket Software can help traders find the right trades and the right time to enter and exit those trades.