Copper
The first market that I’m looking at is the copper market, and we can see that we did fall pretty significantly to kick off the session, but we’ve turned around as rates have drifted a little bit lower. We got close to the 200-day EMA, which is an indicator that a lot of people will be watching closely.
At this juncture, if we were to turn around and break above the $6.50 level, I still think that is a potential sign that we are going much higher. Copper is something that is, I think, going to continue to move on the latest demand-and-supply type of questions. Right now, we are starting to see more flow out of Chile than we did previously, so that has put a little bit of negativity into pricing.
But when we look at the longer-term chart, it is still very much an uptrend. Any strengthening argument for AI probably lifts this as well. I’m bullish, but I recognize this is a noisy market.
DAX
The DAX has jumped straight through the roof during the trading session, perhaps partially due to strong BMW margins, partially due to the idea that the United States and Iran may be getting closer to trying to work something out. The Qataris have been going back and forth. The election in the United States probably provides some false sense of hope.
Nonetheless, though, this is a very strong market, and short-term pullbacks should continue to attract attention. I’ve got nothing as far as shorting this market. I just don’t have any interest. I do believe that the fiscal spending by Germany this year will continue to lift the DAX eventually anyway, so I’m looking to find value on short-term pullbacks.
EUR/USD
The euro has risen as well. I think part of this is probably a little bit of hopium when it comes to the situation in the Middle East. I’m still not completely convinced. We’re right there against resistance, so I’m looking for signs of weakness to short again. This would be a very short-term trade.
I think this market probably chops back and forth. It’s really not until we break above the 1.1350 level that I’m going to get bullish, and we have to keep in mind that the nonfarm payroll announcement comes out in the United States on Friday, so I think the buyers probably only have so much momentum here.
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Finally, looking at the U.S. dollar against the Canadian dollar, we have employment numbers coming out of both countries on Friday, so I anticipate a whole lot of sideways action here. The market is currently testing the 200-day EMA and the 61.8% Fibonacci retracement level from the double bottom. This is an area that previously had been resistance. It now acts as support.
We’ll have to see how this plays out, but I think a little bit of sideways squeeze does make a certain amount of sense. The interest rate differential still favors the United States, although it’s not a wild interest rate differential. It’s not enough by itself, I think, to move the pair.
As things stand right now, I think we’re just trying to figure out what to do with the 200-day EMA. A bit of a bounce would not surprise me at all, and I’m willing to take advantage of it.