EURUSD – The economic/finance issues in Europe are far from being resolved. Quite frankly, the Euro have severe demographic and unemployment issues among most its member countries that make up the Euro. Portugal, Italy, Spain, Greece have all have 25%+ youth unemployment, whereby the youth are leaving to the U.K. or other countries for better work prospects. Germany, what is considered by popular opinion, the economic driver for the Euro, actually has the worst demographic problem in all of Europe. That being said, Europe’s long term prospects and downward trend for the Euro is probably not over. The euro has been caught in a sideways channel for over a year. Therefore, what we are looking for is to buy at the lower channels boundaries and sell at the higher boundaries. I currently still maintain my overall bias to the downside with regards to this market.
USDCAD – This has been an interesting market for several reasons, oil & flight to safety. In my opinion, Oil is probably going lower from where it currently stands as production is not being cut by the major oil producers. Russia and Saudi have openly stated several times that they are not cutting production. Cutting oil production is NOT that simple. Having been involved in the Canadian Tar sands myself, you can not just slow down production without having an impact to the oil well. If production is cut, this will risk damaging the oil wells and could possibly never be recoverable again. Also, international sanctions in Iran have been lifted in late 2015, and now they are searching for investors and expertise on how the country can ramp up their oil production. The world’s Oil supply is probably going higher which will ultimately be bad for the Canadian Dollar, as Canada economy is heavily dependent on the sale of oil. On the other hand, the US Dollar has seen some temporary weakness due to the oversold US stock market condition and a flight to the “risk on” trade. I am still biased on further long term strength in this market, and expect the current down trend to reverse eventually.
US30 – 2016 started off as one of the worst years for the stock market ever recorded in history. Its normal that this will lead to a bounce in the stock market from an oversold condition. Markets tend to always over react. However, the US stock market is facing an uphill battle from where it currently stands. The overhead resistance area at 17020 to 17200 will serve as a huge barrier for the “bulls”. If this resistance channel is broken, I may change my opinion but for now I still maintain my overall downside bias to the stock market.
Good luck this week. If you have any questions please leave a comment below. Safe trading.