RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

The US dollar is giving us an “exhaustion” signal on the downside, but certainly not a reversal of the down trend.  If you measure and map the trade since Trump’s inauguration and “weak” dollar comments being good for global trade and business last January, we’ve been in a steady downtrend on the charts.  Conversely, the Euro has been in a solid uptrend since the beginning of 2017.  The European economy specifically the Northern states, have shown steady improvement and growth.  However, the boogieman of the Euro Zone is the low levels of inflation and the Southern states that rely on “weak” Euro policy as a subsidy.  The ECB has been tapering its QE bond purchases and strengthening is forward guidance on growth, and although we’ve seen an uptick in European bond yields, we’re suspicious as to how much further interest rates and subsequently the Euro currency can run.  Back to the USD; US Growth and Inflation have accelerated all of 2017, pushing bond yields higher, however the dollar has failed to move in step with rates.  With that said, we’re looking for consolidation in the USD in the near-term (we’re hesitant to call a bottom to this 1yr downtrend).  Within this potential USD/EUR consolidation we’re going to be looking at buying opportunities in the USD (so long as the data supports it, which it should) and selling opportunities on any “dovish” commentary from the ECB.  88.50-91.00 will be the immediate-term range we’ll be looking to manage in the USD, and 1.25-1.23 in the Euro. 

10 yr technical picture of the EUR/USD


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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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