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 Failed on Another Test


The inability of the US Dollar Index to rally given the geopolitical turmoil of late is concerning.

The US Dollar Index failed late last week on another test of the 200-day moving average from below, and the inability of the DX to rally given the escalation of the situation in Syria is not a good sign. It seems like only a matter of time before the US Dollar Index will take out the June lows on the downside, and it looks like it is starting to ride the shorter-term 20-day moving average lower. The risk/reward has clearly shifted to the downside in the US dollar, and a break of the June lows would open the door for further downside into the mid 70s, which would coincide with the 2009 and 2011 lows. Sell rallies for now.

Click to enlarge

Amazingly, the euro continues to grind higher and it looks to me like it wants to continue to rally with the February highs only a couple hundred pips away from current levels. This is a complete turnaround from about six weeks ago when it looked like the euro was about to collapse. Although it makes no sense to me at all, the euro looks like a better buy now, and should be bought on pullbacks for now. My only concern is if this trend changes when people get back after Labor Day, but we have to trade the market set in front of us at the moment -- even if it doesn't make much sense!

Click to enlarge

The Canadian dollar and the commodity currencies in general are the lone standouts that remain weak against the US dollar among the major currencies. Maybe this changes with the recent rallies in the energy and metals markets, but it is definitely worth noting when a certain area of the market acts weaker than the rest. If and when the US dollar is ever able to rally again, these commodity currencies should certainly be the leaders to the downside. See the weak Canadian dollar chart below.

Click to enlarge
< Previous
  • 1
Next >
Positions in DX, M6B, M6E, MCD, and 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.
Featured Videos