DXY, RUSSELL 2000, USD/JPY and USD/CAD Forecast – US Dollar and Stocks in Focus Today

DXY Technical Analysis

The first chart is the DXY, or the US Dollar Index. You can see that we are hovering around these 97 levels. My question is, can we break back into the consolidation area that we had been in previously?

That would involve breaking the high from the Wednesday session, and I think ultimately it’s possible, but this will give us a little bit of heads-up as to how the US Dollar may behave against other currencies. If we break below the lows of Wednesday, then it opens up a move down to 95.5, which probably leads itself to more US Dollar weakness in general, but it is a case-by-case basis obviously.

RUSSELL 2000 Technical Analysis

The Russell 2000 is a market that I would pay close attention to, as it could give us a real look at how stock markets are going to behave. The Russell 2000 of course is a market that features smaller US companies, so it has a certain amount of predictive influence because quite frankly if the 2000 companies here can rise, then other companies like Adobe, Tesla, whatever, are going to have a much easier time.

I’m watching the 2,700 to the 2,725 level. If we can break above there, then we can really get going to the upside. Ultimately, a breakout here leads me more likely than not probably buying other indices instead of the Russell, maybe the Nasdaq 100.

USD/JPY Technical Analysis

The US Dollar is stabilizing against the Japanese Yen right at the 200-day EMA. This is a very important candle for the day. I’m going to wait and see how the day closes, but if we can break above the high on Thursday, early morning Friday, then I’m probably buying because the 152 Yen level is an area that’s mattered a few times in the past and we have the 200-day EMA sitting here, so it does set up for a potential bounce play.

USD/CAD Technical Analysis

The US Dollar is somewhat sideways and stabilizing against the Canadian Dollar as well, and as a result, this has also captured my attention. This is a pair that does like to trade in a range for long periods of time, so a bounce from here could lead to the 1.37 level being targeted, possibly even the 1.38 level. A break below 1.35, although bearish, still has to deal with plenty of support underneath.

Ultimately, I think this is probably going to be a fairly choppy day, so I’m not looking for home runs in any of these trades. I think it’s a situation where the most likely candidate to get any real juice out of the market today would be if the Russell 2,000 breaks out to the upside because it should send other indices screaming higher.