10 YR Yield, USD/CAD, AUD/USD and USD/MXN Forecasts – US Dollar in Focus on Friday

US 10-Year Yield Technical Analysis

I normally take a look at either this or the dollar index, and I find this interesting because we are starting to pull back a bit from the 4.30% level, an area that has been resistant a couple of times. This leads me to think about the US dollar.

The stock markets are a little bit of a mess at the moment, so while I would generally look at this and say, “Hey, maybe it’s time to start looking at indices,” I’m going to focus on currencies on Friday just simply because it can tamp down some of the volatility. It does look like it’s going to struggle to continue to go higher and that could lead to a little bit of US dollar selling.

USD/CAD Technical Analysis

The first pair I am watching is the US Dollar/Canadian Dollar. On the chart right now, it doesn’t look very weak, but pretty much any trader can see that there is a lot of resistance between here and 1.3750. It might possibly be a nice shorting opportunity assuming that the consolidation continues. If we break above the 1.3750 level then obviously the consolidation is done and you probably flip the script looking to go to 1.39.

AUD/USD Technical Analysis

The Australian dollar looks like it is trying to continue its uptrend, and we are starting to recover a bit from the pullback. I think this just creates more of a seesaw type of grind to the upside. I do like the Australian dollar. The Reserve Bank of Australia recently raised rates and that is something that makes it a bit of an outlier out there. If we can recapture the 0.71 level, I think we will just continue more of the same action.

USD/MXN Technical Analysis

I’m watching the US dollar against the Mexican Peso. This is a very interesting pair to me right now because of the interest rate differential that favors Mexico. Keep in mind that the 18 Peso level is an area I’ve been watching for a while, and I do think that it is very important. If we were to break above there, that would be very pro-US dollar, but it looks like we’re turning around again, and this does somewhat lend itself to a small short, perhaps trying to get back down to the 50-day EMA, which is right around the 17.50 level.

This is a risk appetite play, and if yields in America start to drop, that could have people looking for other currencies. Remember you get paid at the end of the day to be short of this pair, so it does give you a little bit of a buffer even if things do go wrong and go against you. It’s been in a long-term downtrend for a while, and it looks like it’s trying to get back to that momentum.