The week ahead is quiet in regard to economic releases, and that will strengthen the link between Equities/Forex in what has been a period of trade since April that has currency trade following the direction and momentum of region stock trade. The 21:00ET, 02:00ET, 07:00ET and 11:00ET are still dominating as times that forex pairs are most likely to move on any given day.
In the environment that has such strong links it makes sense to look at where the global traded markets are, especially in their big-picture outlooks. The global equity market sentiment can be easily assessed in the daily movement in S/P Futures (Ticker: ESMO available on MT4 via BROCO.com). The Daily chart on ESMO signaled on Friday the first reversal since going short at the end of April at 1170.
The confirmation of a long break in equities will be with a Daily close above 1105. Conversely, the dollar index (Ticker DXMO) is trying hard to break 86.75 support and if we see a Daily close under that area it will be the first reversal of Usd buying we have seen since Apr 27 10.
Now that we have the Usd drivers aligned and signaling a swing change we can watch the major forex pairs battle near-term price points with the understanding that if 1105 on ES, or 86.75 on DX break and hold, that the major currencies will be reversing the Usd stranglehold.
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