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DXY Unable To Move

Headlines and Open Positions:
Latest currency headlines are having no real bearing on valuations as tenured traders turn attention to global bullion and equity sentiment as the leading index that forex will follow. Trade desk updates have called for consolidation at support above 72.50 on the dollar index (DXY) (76.10) 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, reaction to global buying or selling of risk, and breaking news headlines. Global traded markets are starting to reduce risk, buy bonds, 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.

Price Action:
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 will be sent to subscribers if there is a sustainable bounce off support, or off 76.50 resistance breaks.

Main DXY support: 74.50. Main DXY resistance: 76.50 and 78.00
 
Technical Correlations:
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.

Outlook:
Long-dollar trade signals are trying to build momentum, after last week’s burst of USD buying energy could not be transposed into a break 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 near-term moves if global equity indices get sold. Price action shows consolidation of recent moves to buy the dollar across all major currencies. Caution is required by traders who are looking for sustainable breaks on either side of the US dollar, as a move 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 ten-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.

TheLFB trade desk generates trade signals that highlight specific price points to trade from, and market alerts that highlight sentiment changes. Clients receive detail on gold, silver, crude oil, equity indices, equity ETF’s, the dollar index, and eight major currencies. Full Detail