Weekly Recap: Diverging Moves on Indices, Dollar and Yen Gain Momentum
12 May 2023
This week started off quietly, but we cannot say that it ended without any significant movements. The most interesting price actions can currently be seen on the USD, Yen, and commodities. While many indices continue to move sideways, we can still find some promising opportunities on the charts.
Let's start with indices. The lower CPI from the US on Wednesday gave a positive boost to buyers, but the indices lost steam on Thursday. For example, DAX dropped heavily, setting new weekly lows. On the other hand, Nasdaq is flirting with new long-term highs. Optimism can also be seen on the French CAC, which defended the area around 7350 points.
Now, let's talk about the Dollar. The first reaction to the lower CPI was straightforward, causing the Dollar to drop. However, later, this drop was erased, and the USD shone with a green light. EURUSD managed to break and defend the lower line of the ascending triangle, and the sentiment there is negative. Another example of bullish power for the USD can be seen on the USDCAD, where the price bounced off a lower line of the symmetric triangle and is currently surging higher.
The last two days have been great for the Yen. GBPJPY continues to bounce off the 171.7 resistance, and CADJPY is doing the same after testing the 101.2 resistance. NZDJPY dropped below the key support on 85.2, which should be considered as confirmation of a false bullish breakout and a proper signal to sell.
A stronger USD is causing some disturbance in the commodities market. Silver is currently setting new monthly lows, while oil is drawing a third daily bearish candle in a row. The latter is not surprising, as we were expecting a drop in oil since the beginning of the week.