RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

After a steady bullish run in the USD spanning the last 2 1/2 months, the Dollar has recently suffered some fairly significant chart damage of the immediate term trend this week.  As we don’t expect a free fall in the USD to ensue immediately, we do believe that some caution moving forward is warranted for the bulls.  The predominant factor that will affect the USD moving forward will be the USA’s domestic growth and inflation outlook provided by the data and ultimately how the Federal Reserve Open Market Committee responds in kind.  Across the “pond”, the EUR has been the main beneficiary of weakness in the USD, however we’re skeptical as to whether this recent found strength can persist.  Euro Zone CPI’s were soft this week, and low yields across the Euro Zone reflected upon the dovish data.  In summary, with mixed emotions on both sides of the USD/EUR trade, for the time being, I’m recommending to currency trader’s that it’s best to manage the range in the USD with respect to 93.40 on the low end and 95.00 on the top end until a stronger fundamental catalyst can present itself to drive a longer term trend. 

Taking a look at the Japanese Yen (JPY), we can’t help but notice a possible bottoming process in place.  From a fundamental standpoint, we can’t really pin point anything significant in the Japanese economy that would suggest a reason to be bullish on the JPY, however, the JPY has also been known to be a “safe-haven” currency with respect to a softening of global economic conditions and geopolitical uncertainty.  So with that respect, although a sound fundamental catalyst has yet to present itself, we do believe that the developing bullish technical action in the JPY should not be ignored in the near-term. 

Technical Outlook:

Daily Chart in the USD; Breach of the immediate term bullish trend on Tuesday will keep the bulls on edge.  Until the USD can retake that trend line, the action will remain. Bearish in the near-term for the USD.  

Japanese Yen Daily Chart; Yen breached the recent swing high of 88.71, with the next major upside target perhaps at 89.75.  We’re on watch for a bottoming turn and a possible reversal of the longer-term trend.  

US Dollar Dec ’17 Daily Chart

US Dollar Dec '17 Daily Chart

Japanese Yen Dec ’17 Daily Chart

Japanese Yen Dec '17 Daily Chart

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John Caruso

Senior Market Strategist
Follow John on Twitter @JCarusoRJO. John began his career at Wilshire Quinn Capital, a Wealth Management Firm based out of Los Angeles, California. John made his move to the commodity industry at the end of 2005, and began his path at Lind Waldock, at the time the largest retail brokerage division worldwide. John did his undergraduate work at Robert Morris University in Pennsylvania from 1999-2003, where he was a 4 year varsity basketball letterman.  A self-professed “Macro Trader”, John uses a multi-factor fundamental and “quantamental” trading model in distinguishing market cycles based upon the accelerations or decelerations of growth and inflation metrics. His technical and quantitative approach is heavily reliant upon trend and market range analysis via a custom built standard deviation system in helping him make probability-based market decisions. John is an avid reader of all things pertaining to finance, and behavioral economics. Click here to sign-up for John Caruso's Trading Coach Insights. Daily information and insight on all futures marketsin ranging from metals to equities.
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