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FX Daily Hotline 
22 July 2015     By C Dichio, Analyst

Chart of the day: Bearish key reversal by DXY

 

The US Dollar Trade Weighted Index chart has a 'Peak' Key Day Reversal feature drawn on it.  Although small in size, the bearish key is plotted at 98.151; near 11 April resistance at 98.455.  What is more, it has taken valuations back beneath the May high at 97.775, generating 'bull trap' fears for a further pullback over the short term, possibly towards initial support at 95.454; near the 50-day Moving Average.

At the time of writing, the US Dollar is down against five of the members, only up versus the Canadian Dollar (see Daily Analysis section for the chart).

 

Daily Comment:

 

Following on from the Chart of the Day section, the US Dollar is currently trading in positive ground against the Canadian Dollar.  Priced at C$1.2974 a short time ago, the US unit is probing the 2008/2009 ceiling at C$1.3065.  Against the background of an overbought RSI indicator, that barrier may yet hold up the US$'s advance.  However, in the event of a breakout, next important chart support is around the C$1.4000 region.

The US currency has plotted a bearish key reversal against the Japanese Yen.  The (small) feature, drawn at Y124.48, has probably capped the rally from the prior trading band/base (partially shown) for the near term.  That rally had been heading back towards the June high at Y125.86.  Still, a fall beneath earlier July support at Y120.41 would be required to reaffirm that barrier.

The 'Peak' Key Day Reversal plotted by the US$ versus Norway's Krone is worth a mention, as it demonstrates continuing resistance beneath the March ceiling around NK8.40.  A drop under initial support near NK8.00 would provide further proof of the strength of that barrier.

The Euro tried to fight back on Tuesday.  Against the British Pound, a 1.1% gain was recorded, as the single European currency paused its long-term downtrend.  On a shorter-term basis, the Euro could launch a 'bear trap' recovery, possibly towards the 50-day MA, following the failed break under the June low at �0.6989.  Having pointed out that technical potential, however, one notes a general bullish interest in the UK currency this morning, with this rate trading at �0.7005 at present.

 

Gainers / Losers
Top 5 Gains.
SymbolStockClose% Change
EURGBPEuro/Pounds Sterling0.703+1.1%
EURMXNEuro/Mexican Peso17.4996+1.0%
EUREuro/US Dollar1.0935+1.0%
TWI EUSPEuro Index112.53+0.9%
BRLGBPBrazilian Real/Pound Sterling0.2027+0.9%
Top 5 Losses.
SymbolStockClose% Change
NOKUS$/Norwegian Krone8.1154-1.5%
GBPEURGBP/Euro1.422-1.1%
SEKUS$/Swedish Krona8.5375-1.1%
DKKUS$/Danish Krone6.8244-1.0%
USDEURUS$/Euro0.9143-1.0%
    
The FX Model Portfolio
  • There are no changes today.
Daily Analysis

Symbol Name Comment Close 1 day Support Resistance
DXYUS Dollar IndexS-t rally stalls at 11 Apr resistance (98.455) with a 'Peak' KDR from 98.151. Failed break over the May high (97.775). Potential 'Bull trap'.97.302-0.8% 93.563/95.454100.39/98.455
EUREuro/US DollarFailed break under the May low (1.0819). Potential 'Bear trap'.1.0935+1.0% 1.0458/1.0661.1534/1.1216
GBPUSDBritish Pound/US DollarHolds the choppy uptrend from the Apr floor.1.5557-0.0% 1.5171/1.5331.5945/1.593
CADUS$/Canadian DollarS-t rally tests the 2008/2009 ceiling near 1.3. RSI overbought.1.2948-0.4% 1.192/1.21281.3384/1.3065
JPYUS$/Japanese YenS-t rally from the upper side of the prior broad range/base is capped beneath the June high with a (small) 'Peak' KDR.123.89-0.3% 118.33/120.41135.15/125.86/124.48
ZARUS$/South African RandHesitates by the Jun high. However, holds the l-t uptrend towards the late-2001 peak.12.3273-0.9% 11.669/12.053813.8401/12.7105
KRWSouth Korean Won per 1 US DollarExtends the overbought advance to the 2013 high (1162.9).1158.22+0.5% 1097.47/1127.551185.53/1162.9
CHFUS$/Swiss FrancPauses the rally from the s-t base within supply laid down in Mar-Apr.0.9584-0.6% 0.8501/0.90721.0129/0.9863
EURGBPEuro/Pounds SterlingPauses the s-t decline. Potential 'bear trap' under the June low (0.6989).0.703+1.1% 0.6679/0.6894/0.68940.7389/0.7224
EURJPYEuro/Japanese YenRetreat from the Jun peak area slows near support at the May/early-Jul floor.135.48+0.7% 126.1/133.1141.06/137.8
EURCHFEuro/Swiss FrancRanging beneath the Feb high.1.0482+0.4% 0.9776/1.02341.2097/1.0812
GBPJPYGBP/Japanese YenS-t rally from oversold loses momentum on the approach to the Jun ceiling.192.727-0.4% 180.96/185.003197.453/195.885
GBPCHFGBP/Swiss FrancOverbought s-t rally slows on the approach to the Mar high.1.4911-0.7% 1.4141/1.44671.5589/1.5195
CHFJPYSfr/Japanese YenRetraces the rebound from oversold.129.264+0.3% 119.917/127.171134.62/131.35
AUDJPYAustralian Dollar/Japanese Yen'Bear trap' recovery from oversold has paused.91.924+0.3% 88.244/89.16994.991/92.432?
AUDAustralian Dollar/US DollarHolds the l-t downtrend. RSI remains near oversold levels.0.7419+0.6% 0.69650.8164/0.7849


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