Dollar Outlook: Almost There

Yen: The dollar traded between roughly JPY109.45 and JPY110.16 last Monday, February 4 and remained in that range the rest of the week. Yet the close moved higher in the first part of the week and slipped in the last two sessions. It remains within spitting distance of JPY110.00, which it has not closed above here in 2019 yet. The extended sideways movement prevents the technical indicators from generating a consistent signal. A break below JPY109.30 might be an early signal that the market is giving up on the JPY110.00 cap. The dollar-yen rate often appears to be range-bound, but the lower end of the range is not clear, but the initial test could be on JPY108.50. 

Sterling: Sterling has fallen in eight of the past ten sessions. The six-week rally ended in January and has been followed by a two-week slide. The two-week drop saw it give back nearly half of its rally. Resistance is seen near $1.3000 and then again by $1.3040. The 200-day moving average is between the two points by $1.3025. Despite sterling having been sold to $1.2855 last week, it did not close once below$1.2930. The MACDs and Slow Stochastics warn of the downside pressure may not have been exhausted. 

Canadian Dollar: Even after Canada reported stronger than expected employment and wage growth, the US dollar finished the week nearly 1.35% higher. It was the biggest weekly gain of the year. The pullback spurred by the Canadian employment data found near US dollar bids near CAD1.3230, a retracement objective of this month's run-up that had begun near CAD1.3070, and just below the 20-day moving average (~CAD1.3240). The greenback faces chart resistance by CAD1.3330 and then CAD1.3375.   The MACDs and Slow Stochastics have only recently turned higher, and suggest the US dollar's recovery may have legs. 

Australian Dollar:  As last week progressed, the shift in the Reserve Bank of Australia's position became increasingly clear, culminating in a cut in its GDP and inflation forecasts, which helped drive the Australian dollar to its lowest level in more than a month (~$0.7060). The RSI is overextended, but the Slow Stochastics show a bearish divergence and the MACDs crossed lower at the start of last week. A bounce toward $0.7100-$0.7120 may offer a lower risk entry point for bearish participants. That said, the Aussie has entered a band of congestion that extends to $0.7000. The surge in the price of iron ore has done Australian dollar little good, though if it ticks higher some will try to make the link.   

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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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