During trading on Thursday, we will have to keep a close eye on the US dollar, as we are at a spot where things could start to change trends. Commodities will of course be in focus as well.
US Dollar Index: The 200-Day EMA Is the Line in the Sand
The US Dollar Index (DXY) has the attention of traders during the session on Thursday, due to the fact that the 200-day EMA is being tested. It is worth noting that the 99 level has been like a brick wall, and we are pulling back from it again. That being said, if we can break above 99 on a daily close, that would signify a shift in the attitude of traders.
US Dollar Index (DXY) daily chart – Price tests the 200-day EMA near the critical 99 level. Source: TradingView.
A Break Above 99 Would Have Massive Implications Across Forex
We certainly have seen some US dollar resiliency as of late, but we’re also at a point where that could end. Watch the candlestick not only for this session on Thursday, but to see if we can get above the highs on Tuesday—because if that ends up being the case, this thing rises and it has massive implications across the Forex world.
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See all EUR/USD forecastsEUR/USD: Hanging at the 200-Day EMA – A Breakout Is Brewing
The Euro against the US dollar (EUR/USD) is also worth watching during the session, as we are hanging right at the 200-day EMA. If we can break down below the lows of the Wednesday session, then there is a possibility of a move down to the 1.15 level. If we can break above the highs of Wednesday, then a short-term recovery towards 1.17 is the anticipated target.
EUR/USD daily chart – The pair tests the 200-day EMA with key levels at 1.15 support and 1.17 resistance. Source: TradingView.
1.15 or 1.17: Wednesday’s Range Holds the Key
This is a binary setup: a break below Wednesday’s lows opens the door to 1.15, while a push above its highs targets a short-term recovery towards 1.17. The direction here will be tightly correlated to what happens with the DXY at the 99 level.
USD/MXN: The Carry Trade Opportunity That Keeps on Giving
The US dollar against the Mexican peso (USD/MXN) is an exotic currency pair that a lot of short-term traders don’t pay attention to, but the 17.5 level being broken to the downside would kick off more of the carry trade. This has added quite a bit to the account over the last several months, just collecting that swap at the end of the day.
USD/MXN daily chart – The pair trends lower toward the critical 17.5 carry-trade level. Source: TradingView.
Below 17.5, the Carry Trade Accelerates
This ties in with the US Dollar Index and how the dollar behaves against the euro, but this is a supercharged carry trade situation. The preference is to short this pair. If we break to the upside above 17.8, then things probably change—but going long is unattractive due to the cost of holding.
TSX 60: A Commodity Proxy That Most Retail Traders Ignore
The TSX 60 in Toronto is worth watching because this index is heavily laden with commodity companies, alongside major financials like the Royal Bank of Canada and industrials like Canadian National Railway—which is itself tied to commodities through logistics. Shopify and a few other tech names also feature in the index.
TSX 60 daily chart – The index holds its uptrend and is used as a proxy for commodity-market direction. Source: TradingView.
Above Wednesday’s Highs, $34,500 and Then $35,000 Come Into Play
This index is used primarily as a proxy for how commodity markets are going to behave. It sold off on Wednesday only to turn around and show signs of life. On Thursday so far, the action is quiet. If we can break above the highs on Wednesday, the next targets are $34,500 and eventually $35,000. This is an index worth watching, but unfortunately many retail traders overlook it.