If Stronger Than Expected Inflation, Consumption, And Jobs Didn't Lift The Greenback, What Will?

Euro:  The single currency had fallen to almost $1.17 on the last day of March and recouped nearly three cents in the first half of April.  It was knocking on $1.20 in the second half of the last week.  It has not traded above there since March 4.  The (38.2%) retracement of the decline from the $1.2350-level seen at the start of the year is near $1.2025, just above the upper Bollinger Band. The (61.8%) retracement of the leg down from the late Feb high (~$1.2245) is near $1.2035.  A convincing move above there is spur talk of $1.22.  The MACD is at its best level in six weeks and approaching levels that it peaked in late Feb.  The Slow Stochastic is stretched at its best level of the year and appears to be moderating.   Initial support is seen in the $1.1950-$1.1960 area (FXE).  

Japanese Yen:  The decline of US yields in the face of the large coupon supply and strong price, consumption, and employment data seemed to undermine the greenback against the yen.  It fell in the first four sessions of last week before stabilizing ahead of the weekend.  The dollar found a bid around JPY108.60, its lowest level since March 25, a little above where a base was forged last month (~JPY108.30-JPY108.45).  The five-day moving average crossed below the 20-day for the first time since early January, reflecting this month's downtrend from the March 31 high, a whisker shy of JPY111.  The momentum indicators are still falling quickly.  A close above JPY109 suggests the tone may be stabilizing (FXY).  

British Pound:  Sterling has been recording lower highs since peaking on Feb 24 near $1.4235.  According to Bloomberg, last week, sterling took out the March low by 1/100 of a penny and proceeded to recover 1.5 cents to about $1.3820 and finish the week at new highs.  The MACD and Slow Stochastic have turned up, and the five-day moving average is poised to move above the 20-day moving average for the first time since early March.  The first important obstacle is the high set earlier this month, near $1.3920, and $1.3950 is the (50%) retracement objective of the decline since late Feb high.  Above there and then $1.4000-$1.4020 area may offer more formidable resistance.  The euro peaked ahead of the weekend at GBP0.8720, its best level since the end of February, and posted a key reversal ahead of the weekend. If the near-term high in place, like the technical indicators suggest, sterling should outperform the euro in the days ahead, and the cross may return to GBP 0.8500 (FXB).  

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Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

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