Headlines and Open Positions:
Latest currency headlines are centered on euro valuations being impeded by EU government bond valuations and weaker equity markets forcing moves to buy US dollar ‘safety’. Trade desk updates have called for consolidation at support above 72.50 on the dollar index (DXY) (76.40) in the mid-term, and to monitor resistance at 76.50 very closely, which is an area that has been in tested at the start of trade this week. The exchange traded funds (ETF’s) that track dollar index momentum, UUP (dollar bullish fund) and UDN (dollar bearish fund), are in a sideways consolidation phase of trade that looks ready to break with USD buying in the near-term.
Major global currencies are trading in mixed fashion against the US dollar, with all impacted intra-day by their own regional economic outlooks and breaking news headlines. Global traded markets are starting to reduce risk, sell equities, and buy the USD.
Existing currency positions should be closely monitored this week while the strength of recent long-dollar moves are analyzed. Inverse Usd trade is strongly aligned to S&P 500 movement; as stocks move down, the Usd moves up, and vice versa.
Strong buying activity was seen at 74.50 on DXY trade in April and May. This potential price reversal area (swing point) has held steady as support, and will be closely monitored. Market alerts sent to subscribers if support holds and 76.50 resistance breaks.
Near-term DXY support: 74.50. Main DXY resistance: 76.50 and 78.00
Daily trading range on DXY is 60 ticks, which is above the historical norm and indicates high speculative interest. 50-day Simple Moving Average (NYSE:SMA) on DXY is @ 75.40. 20-day SMA is at 74.60. DXY price action has a 36-month 75% correlation to crude oil and SPY moves, and an 80% correlation to euro (Eur/Usd) currency moves.
Long-dollar trade signals are trying to build momentum, after last week’s burst of dollar buying energy could not be transposed into a test of dollar index resistance at 76.50. Clients will be notified via trade signals and market alerts when price action breaks and holds.
Sentiment towards the Usd remains mixed, but favors long moves if global equity indices get sold. Price action favors consolidation of recent moves to buy the dollar across all major currencies. Caution is required by traders who are looking for sustainable price action on either side of the US dollar as a break higher in DXY values above 76.50, or lower below 74.50 in the mid-term will be determined by equity market sentiment.
The major currency pairs are in a nine-day sideways crawl, with near-term trade trying to add to recent dollar buying. Major currency valuations are being dominated by daily regional economic releases and news headlines.
The detail below forms a part of the in-depth daily analysis provided to subscribers. This helps guide traders with analysis on intra-day price movement, trend, and momentum. Clients will note how regularly the Swing Point and Support or Resistance areas below are used each day.
Content taken from TheLFB Trade Plans