Change The Month, Change The Trend?

Dollar Index:  The Dollar Index peaked near 93.45 on the last day of Q1, its best level since last November. Some position squaring ahead of a long holiday weekend for many saw it come back off toward 92.80 before the weekend.  It recovered and resurfaced above 93.00 after the strong employment report. The MACD and Slow Stochastic are turning down from elevated levels.  Ideally, from a technical perspective, the Dollar Index would retest the 93.45 area, which would be aggressively defended, confirming a near-term high.  A few technical considerations, including the 200-day moving average, the up trendline off the late February lows, and the high in early March, converge in the 92.50-92.60 area.  A break of that is needed to signal anything important on the downside.  

Euro:  The euro held important support at $1.1700, which corresponds to the (38.2%) retracement of the rally from the March 2020 low. However, it failed to push back above $1.1800, which seemed to deter strong bottom-picking.  The momentum indicators are trying to turn up, but the news stream still seems to work against the common currency.  A convincing break of $1.1700 could spur another leg down, and $1.16 represents a complete round-trip since the eve of the US election.  On the top side, a move above $1.1800 is constructive and would confirm a near-term bottom is in place (FXE).  

Japanese Yen:  The greenback stalled at almost JPY111.00 at the end of the quarter, its highest level in a year.  It came back bid after falling to almost JPY110.35 after the stronger than expected jobs data in thin pre-weekend trading in the US.  There were two highs from March 2020, JPY111.70 and about JPY112.25.  The 2019 high was set near JPY102.40.  The momentum indicators are over-extended but have not turned down, but the dollar is knocking against the upper Bollinger Band (~JPY110.70).  A break of the JPY109.75-JPY110.00 is needed to signal a near-term top is at hand (FXY).  

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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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