Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Currency Market: US Dollar Index Has Failed to Find Support

By

The US Dollar Index is on the verge of breaking the June lows, and it should continue trending lower.

PrintPRINT
The US Dollar Index has remained under pressure, and it has not even been able to stabilize at the longer-term support around the 200-day moving average. Even the recent rise in interest rates has not helped the US dollar, and it seems like investors are losing confidence in the safety of the greenback. A break of the June lows would make the pattern over the past six months look more like a broadening top, which is typically a bearish formation. Inflation concerns are coming into focus with the rise in interest rates, and that could keep the US Dollar Index trending lower; therefore, I would look to sell rallies. This is definitely a frustrating development as I have been a US dollar bull, and the below chart is a classic example of why the markets have presented a difficult environment for trend followers in 2013.


Click to enlarge

Even the weakest currencies have started to rally against the US dollar, as evidenced by the British pound breaking above the 200-day moving average for the first time since January. It failed at this level in June, so the fact that it is finally closing above the 200-day moving average for consecutive days is definitely a bullish development for the British pound. It looks like the 1.55 level should be decent support on any pullbacks, and long positions can be entered on a scale-back into the moving averages.


Click to enlarge

The Canadian dollar is one of the few currencies still in a longer-term downtrend against the US dollar, and this seems to be the case with most of the commodity currencies. However, shorter-term trends seem to have improved; even the Canadian dollar and New Zealand dollar are starting to act better. The only exception seems to be the Australian dollar, which remains very weak. I would use today's weakness in the Canadian dollar to cover short positions more as a function of risk management. The currency markets have definitely not been trending very well for us, so it is best to step aside until some clearer trends develop. Unfortunately, it looks like these trends will be bearish for the US dollar.


Click to enlarge
Positions in DX, M6B, M6E, MCD, MJY 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.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE