The writing has been on the wall today as the USD continued to perform on the back of positive US economic data, as JOTLS job openings came in strong at 5.74M (exp 5.67M) showcasing that the US labour market is continuing to expand. This in turn has lead to further unwinding of safe haven currencies against the USD and risk sentiment for the most part improving. One of the clear winners for traders has been the bears in the commodity markets as they look to take a swipe on the back of USD strength. Gold and silver have both come under pressure in recent days and today saw further levels break as it continued to drift lower. Silver has been the major stand out so far as it looked to extend its bearish streak for the 11th day!
Silver bears are certainly having a field day and have even left the 20 day moving average behind as they look to drive the precious metal lower. It’s quite rare to see an 11 day candle bearish streak and at some point we could see unwinding pressure as the market looks to make some short term gain. But for now it’s all about the sell as the hedged bets continue to be unwound, and support levels are looking very important at 16.089 and 15.620. In the event of a strong buy back from the bulls then I would expect resistance at 16.566 and 16.775, but with the current market it would certainly be a big ask for the bulls to push through 16.775 unless we saw a major global event which lead to hedging again.
As I touched on yesterday the Yen has been one to watch with all of this unwinding of safe havens and so far we have seen some very large movements for the USDJPY. The labour market is expanding as I mentioned before in my first paragraph and this is driving market anticipations that we will see a rate hike in June which will be a big deal. The FED for the most part has been slightly dovish lately, and Trump himself does favour low interest rates, but with the current rate of US expansion it will certainly be in the FEDs interest to keep pushing interest rates higher to enable normalised monetary policy. They will also be targeting higher inflation as well, which will be key going forward. But for now the USDJPY continues to be one of the big movers as the USD bulls take control.
USDJPY has pushed through resistance at 113.754 and is looking to push higher. One of the key bands of resistance will be between the 23.6 Fibonacci level and 114.846 where we could see some selling pressure on the USD and the bears look to take a quick swipe. For the most part though expectations are running high that the bulls could be in for a good run up until June, especially we continue to see strong US economic data and a hawkish FED.