The Underlying Fundamentals
For the past few weeks primary driver of the markets has been unexpected data releases, and this week was no different. On Friday the stronger than expected U.S Housing Data helped the Dollar hold onto it recent gains and had many pairs closing the week near key levels. In the next few weeks there is bound to be more unexpected data for the market to react to, and like everyone else I am anxiously awaiting the next unexpected set of numbers. All kidding aside, next week is ripe with potential market movers. Consumer confidence, FOMC minutes, ISM, and employment reports are all on the table, so be on the lookout for anything that shows a weak U.S economy to trigger a sharp correction in the Dollar related pairs.

GBP/USD
Early in the week the Pound surged up through 1.9850 and towards psychological resistance between 1.99 & 2.00. However, by the end of the session the pair had reversed and spent the rest of the week retracing its recent gains. By Friday it was back near 1.96. Unless this pair can push through and hold 1.99 I expect this pair to trade sideways or down towards 1.9450 support.

EUR/USD
This pair has been unable to sustain any bounce off of 1.29 and continues to be at the mercy of an uncertain economic outlook. If sellers can break the Euro down through 1.2875 the next level of support would be near 1.2750. The stronger than expected U.S housing numbers that came out on Friday might help the bears do just that.

USD/JPY
This week the 121.75 level served as some resistance for the dollar, and the volatility on Wednesday and Thursday made it hard to hold onto any longer term position trades. If this pair cannot push above that level I would expect a pullback or consolidation at least until the Bank of Japan announces a rate hike, for which there is still no guarantee.

USD/CHF
For the first time in over two weeks this pair finally sustained a push above 1.25, closing near 1.2540 on Friday afternoon. If buyers can hold the dollar above 1.25 I would expect some type of follow through, and based on the proximity of support, initiating a long position at the current levels is an attractive trade.

AUD/USD
After yet another unsuccessful attempt to push through .7950, the Aussie broke down closing out the week near .7750 support. This nearly 200 pip move in 3 days is a classic example of why you should tighten your stops as any trade approaches a major resistance level. Sellers have definitely taken control of this pair, though a dead cat bounce would not come as a surprise after such a large move.

USD/CAD
The dollar continues to strengthen against the Canadian, and closed the week sitting on support near 1.1790. In the past few weeks the volatility of this pair has been steadily increasing and that has made it hard to stay on the right side of the market. Resistance near 1.1850 is the next key level that buyers must overcome if they are to keep this train rolling, otherwise a pullback or consolidation is likely sometime soon.

Derek Frey is Head Trader at Odom & Frey Futures & Options.

Risk Disclaimer
Past performance is not indicative of future results. Trading futures and options is not suitable for everyone. There is a substantial risk of loss in trading futures and options.