samedi 18 avril 2015
Dollar Bulls Bend but Don't Break
Posted on 09:03 by nice news
The US dollar fell against other the major currencies and many emerging market currencies last week. Punished by disappointing data, it threatened to breakout of ranges that have confined it. However, the third consecutive upside surprises on core CPI helped the greenback stabilize ahead of the weekend. The price action reinforces our sense that after trending for several months, the dollar has entered a consolidative phase. Trading is choppy, and positioning is still stretched, but the divergence of monetary policy trajectories will likely prevent sharp dollar losses.
The Canadian dollar may be an exception. The combination of a less dovish central bank, higher than expected inflation and stronger than expected retail sales, coupled with the 30% rally in oil prices over the past month, sent the Canadian dollar sharply higher. Indeed, the Canadian dollar was among the best performing major currency (2.6%), behind another petro-linked currency the Norwegian krone (3.4%) and Swiss franc (2.8%), where Grexit fears found succor.
Even though it was the biggest weekly advance in four years, the pre-weekend price action is potentially a bearish signal for the Canadian dollar (hammer). The US dollar appears to have found support near CAD1.2080. This corresponds to three standard deviations from the 20-day moving average (Bollinger Bands are two standard deviations from the 20-day average). The CAD1.2300-30 area offers initial resistance, but it probably requires a move back above CAD1.24 to signal the breakout was false.
The euro rallied three and a quarter cents of the low set at the start of the week near $1.0520. It ran out of steam near $1.0850. The RSI and MACDs are constructive, and the five-day moving average is above the 20-day. Slow stochastics is crossing higher. The broad range that has confined the euro for over a month now is seen $1.05-$1.1050. The double top that we discussed last
The Canadian dollar may be an exception. The combination of a less dovish central bank, higher than expected inflation and stronger than expected retail sales, coupled with the 30% rally in oil prices over the past month, sent the Canadian dollar sharply higher. Indeed, the Canadian dollar was among the best performing major currency (2.6%), behind another petro-linked currency the Norwegian krone (3.4%) and Swiss franc (2.8%), where Grexit fears found succor.
Even though it was the biggest weekly advance in four years, the pre-weekend price action is potentially a bearish signal for the Canadian dollar (hammer). The US dollar appears to have found support near CAD1.2080. This corresponds to three standard deviations from the 20-day moving average (Bollinger Bands are two standard deviations from the 20-day average). The CAD1.2300-30 area offers initial resistance, but it probably requires a move back above CAD1.24 to signal the breakout was false.
The euro rallied three and a quarter cents of the low set at the start of the week near $1.0520. It ran out of steam near $1.0850. The RSI and MACDs are constructive, and the five-day moving average is above the 20-day. Slow stochastics is crossing higher. The broad range that has confined the euro for over a month now is seen $1.05-$1.1050. The double top that we discussed last
Dollar Bulls Bend but Don't Break
Categories: Dollar Bulls Bend but Dont Break
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