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Currency Pair Overview: Long-dollar Fundamentals

|Includes: FXA, FXB, FXC, FXE, FXF, FXY, UDN, PowerShares DB USD Bull ETF (UUP)

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Currency Pair Overview:


Long-dollar Fundamentals

Long-dollar fundamentals in Tuesday trade- against the trend. Global equity markets dropped lower on Tuesday, with futures numbers indicating a weak start for Wall Street stocks. That will allow the Usd to more easily find buyers, in the move from stocks to bonds. Gold is managing to hold support, at the same time that oil is moving quickly lower, in another move that supports the long side of the dollar index.

TheLFB Charting LinkDollar Index Technical View: TheLFB Member Charts
4 Hour Chart Flows: Mixed Price Points: 75.58, 76.60, and 78.45 Looking for: A long, wave V)

Momentum: The dollar index went into Long mode in early December and held that trend up until early January. The read turned short this week, and a weekly chart close below 76.50 will be a signal that sellers have the upper hand.

Elliott Wave: The dollar index bounced higher by more than 50 points after lows at 76.60 were reached in the past week. In that area a Short, corrective blue wave IV) with a double zig-zag structure could already be completed, which signals for a bullish Usd in the near future.

A bullish Usd market will continue with a Long blue wave V) leg that should reach the 78.00 and even 79.00 target area, if the low of wave IV) at 76.60 holds. We are expecting a five wave move up, in a Long, blue wave V). Curretnly, the sub-wave i is developing

The euro (Eur/Usd 1.4315) has moved very little in trade this week, after structural questions were raised in regard to Euro-member states ability to service debt. The euro is trading just below the 20-day simple moving average, and not too far from the 200-day moving average, in the 1.4275 area. Mixed trends, looks weak.

The pound (Gbp/Usd 1.6375) moved straight through 50-day moving average at 1.6320 on the strength of CPI and inflation reads that were very strong. The pair will get easily bought on the days that the dollar index is sold. Today however, is not one of those days that supports cable bulls, as stocks and commodities find sellers instead. Looks bullish.

The aussie (Aud/Usd 0.9210) is struggling with the 0.9330 area, and a swing point that has been in place for nearly three months. The long move will only happen on positive equity and commodity markets, and that is not going to be today. The pair looks lost.

TheLFB Trade Plan of the Day is one of the six that are available to members on the major pairs each day, plus four Jpy based cross pairs, as well as S&P futures, oil, gold, and the dollar index. 

The cad (Usd/Cad 1.0290) barely moved throughout the overnight session, ahead of the Bank of Canada interest rate meeting on Tuesday. The BoC has complained about the strength of the Canadian dollar, and is something that is likely to be heard on Tuesday as well. This appears to be a good set-up for a straddle.

TheLFB Charting LinkCad Technical View: TheLFB Member Charts
4 Hour Chart Flows: Short. Price Points: 1.0150-1.0170. Looking for: A Short, wave V

Momentum: The cad's trend moved Short on November 16th, and has been a roller coaster pattern ever since, with no real strength either way. The pair can be just as easily be bought as sold.

Elliott Wave: Usd/Cad traded 90 pips higher at the end of the last week after finding support around the 1.0220 zone. The bullish price action from that low was quite slow and definitely not impulsive (on intra-day charts), which suggests that this was just a black wave B) reversal, before another push into new lows.

We are looking for a lower black wave C) move, which is a part of a larger red wave V, which will complete the whole ending diagonal structure shown in a blue wave 5) position. Once the diagonal is complete, somewhere around the 1.0150-1.0170 (Fibonacci support zone), we will look for a bullish reversal (Usd strength).

The swissy (Usd/Chf 1.0320) is currently trading in a 100-pip channel, squeezed within three important daily moving averages, the 20-SMA in the 1.0315 area, the 50-day moving average in the 1.0220 area and the 100-day moving average in the 1.0260 area. Unless the entire market develops and sustains a trend, it is best to leave swissy alone.

The yen
(Usd/Jpy 90.70) gave up gains and moved back to the lows of the 4 hour chart ranges, and 100 day SMA support at 90.40. Eur/Jpy dropped through the 200, 100, 50, and 20 day SMA's. E/J Swing Point: 130.50. Gbp/Jpy is above the 100, 50, and 20 SMA's. G/J Swing Point: 148.30. Favor short Jpy trade overall.

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