The last day of the week will be definitely very interesting. Overnight, we found out that an attack on Iran was approved and the US military was in early the stages of that operation before being later called off by Donald Trump. That is definitely a risk killer and a factor that positively affects the safe haven assets and oil. On the other hand, we have global indices looking towards all-time highs, as if there’s no risk at all. Where is the logic? Well, first of all, wars are usually good for stocks (in the mid and long-term) and shares are currently being driven by central banks policies rather than news from the Gulf.
In this environment, the dollar took a heavy blow but has started Friday with a recovery attempt. The US dollar index has met long-term dynamic support; the lower line of the ascending triangle pattern. If buyers are thinking about stopping the drop, this is the place for it. A breakout will give us a super strong sell signal.
USDJPY broke the lower line of the flag and the horizontal support at 107.9, but most importantly, the long-term dynamic upwards trend line. Closing the week below the latter will be a proper signal to sell USD.
The weaker USD along with tensions in Gulf region are great for the price of gold, which has made new long-term highs. This week’s candlestick is very encouraging and the price being above the horizontal resistance at 1,365 USD/oz is a legitimate signal to go long. Is gold fever back?