Most Currencies Now Rallying Against US Dollar

By Cody Tafel  OCT 29, 2013 1:25 PM

US Dollar Index has broken below the 80 level, which should now be resistance.

 


The US Dollar Index tested the February lows, and is trying to turn higher, although I think the 80 level will now provide formidable resistance on the way back up. However, this level lead to a relatively strong bounce earlier this year, and recent COT (Commitment of Traders) data shows speculators net short the US dollar for the first time since early this year. The rally from early February started around the same levels and similar COT readings, so maybe history rhymes and the US dollar will at least stabilize near term. The trend for now remains clearly down until proven otherwise so I would not be too optimistic.


Click to enlarge

The Japanese yen is forming a huge triangle pattern, and it is now coming to an apex sitting right on top of 200 day moving average support. It looks like the USDJPY cross could rally back through 100 soon, and that could certainly be a bullish indicator for risk in general. It is interesting that the Nikkei (INDEXNIKKEI:NI225) is also forming a huge triangle pattern that should resolve to the upside as well. This could be the key currency cross to watch in the coming weeks and into year-end as a break through 100 might trigger another leg higher for the equity markets around the world.


Click to enlarge

The Canadian dollar is another currency that is relatively week and now looks to be trending lower again versus the US dollar. As you can see in the below chart, the CADUSD cross touched the 200 day moving average resistance perfectly twice during the past month, and each time it has led to a deeper correction. The CADUSD has broken below the early October lows, and clearly remains in a challenged position, even with the US dollar under pressure. I would continue to sell CADUSD on rallies.


Click to enlarge

Positions in DX options, CAD & JPY futures.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.