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FX Daily Hotline 
17 November 2015     By C Dichio, Analyst

Chart of the day: DXY reasserts s-t rally


Following a short-lived, and shallow, correction from overbought, the US Dollar Trade Weighted Index has reasserted its advance to the year's prior highs.  That ceiling is situated near the psychological 100 level.  The RSI indicator is rising towards overbought levels again, so, some further hesitation is possible near that barrier.  However, a sustained fall beneath the sideways area around 98 would be required to remove pressure from those highs, which stretch up to 100.39.  In the event of a clearance, next chart resistance is not until 102.15, from the March 2003 high.

DXY measures the US $ versus a basket of six currencies, weighted:  Euro 57.6%; Yen 13.6%; UK � 11.9%; Canadian $ 9.1%; Swedish Krona 4.2% and Swiss Franc 3.6%.  At the time of writing, the US currency is up against all.


Daily Comment:


Following on from the Chart of the Day section, the Euro has the majority stake in the US$ Index and its picture is almost the inverse of DXY's.  Shedding 0.8% versus the US Dollar yesterday, the single European currency has reasserted the near-term downtrend towards the March/April floor near US$1.0450.  We would point out that the RSI is at a low level again.  However, the rate is currently changing hands at US$1.0659 and is resuming the decline towards the year's earlier platform.

On Monday, the Euro renewed the break under the 'Trough' Key Day Reversal of 5 November against the British Pound.  This action extended the short-term decline to the lows of the broad trading band at �0.6936.  Trading at �0.7018 a short while ago, the single European unit continues to weaken today.  A jump past initial resistance near �0.7200; near the 50-day Moving Average, would be needed to indicate continuing support at the year's floor area.

The Euro fell out of the medium-term trading band/top versus the Japanese Yen yesterday.  Although intraday support was noted at Y130.65 in the session, a more forceful up move is required to remove pressure from the smaller base area, which stretches down to Y126.1.

The Swiss Franc similarly extended its downward trend against the Japanese unit.  A leap over initial resistance at Y123.396 would have to be seen to delay an extension of the downtrend from the June ceiling towards the March floor at Y119.917.

In contrast, the US Dollar reversed up v Yen after correcting the overbought situation.  Support was encountered above the prior short-term range/base, as the Greenback reasserted the rally towards the June-August highs at Y125.86-125.28.

The UK currency is retracing the 'Peak' key reversal of 5 November, heading back towards the mid-September barrier at Y188.316.  We will consider buying a breakout, as a base formation will be in place (see also hotline for 12 November).



Gainers / Losers
Top 5 Gains.
SymbolStockClose% Change
BRLGBPBrazilian Real/Pound Sterling0.1722+1.0%
KRWSouth Korean Won per 1 US Dollar1173.89+0.9%
DKKUS$/Danish Krone6.9825+0.8%
CADEURCanadian Dollar/Euro0.702+0.7%
Top 5 Losses.
SymbolStockClose% Change
RUBRussian Ruble per 1 US Dollar65.3323-2.1%
EURZAREuro/South African Rand15.299-1.3%
EUREuro/US Dollar1.0686-0.8%
BRLUS$/Brazilian Real3.8198-0.8%
NZDNew Zealand Dollar/US Dollar0.6493-0.7%
The FX Model Portfolio
Date Stock Code Type Open Price Current Price % P&L Target Stop
25 Aug 2015 US$/Canadian Dollar CAD Long 1.3336 1.3331 -0.04% 1.3
7 Sep 2015 GBP/Singaporean Dollar GBPSGD Long 2.1808 2.1629 -0.82% 2.1
28 Sep 2015 Euro/South African Rand EURZAR Long 15.6895 15.299 -2.49% 14.75
4 Nov 2015 US$/Norwegian Krone NOK Long 8.6291 8.696 +0.78% 7.89
6 Nov 2015 Brazilian Real/Pound Sterling BRLGBP Long 0.1753 0.1722 -1.77% 0.162
12 Nov 2015 GBP/South African Rand GBPZAR Long 21.8007 21.7632 -0.17% 20.25
  • We watch to buy Sterling v Yen.


Daily Analysis

Symbol Name Comment Close 1 day Support Resistance
DXYUS Dollar IndexReasserts the rally to the year's earlier ceiling near the psychological 100 level after correcting from overbought. RSI high again.99.376+0.4% 96.466/98.432102.15/100.39/99.504
EUREuro/US DollarReasserts the decline towards the Mar/Apr floor near 1.05 after a bounce from oversold. RSI low again.1.0686-0.8% 0.9613/1.045/1.06751.1096/1.083
GBPUSDBritish Pound/US Dollar'Bear trap' recovery shows a minor loss of momentum.1.5203-0.2% 1.4857/1.50271.5659/1.5509
CADUS$/Canadian DollarS-t rally approaches the Sept high (1.3457).1.3331+0.1% 1.2657/1.28321.4/1.3457
JPYUS$/Japanese YenReverses up towards the Jun-Aug highs after correcting from overbought.123.18+0.5% 120.07/122.23125.28/123.6
ZARUS$/South African RandHolds the s-t rally near the all-time high.14.3149-0.5% 12.9828/14.0742/
KRWSouth Korean Won per 1 US DollarRallies from oversold within the late-Jul/early-Oct top.1173.89+0.9% 1097.47/1120.611208.72
CHFUS$/Swiss FrancRenews the s-t rally to the Mar high (1.0129). RSI high.1.0098+0.4% 0.9836/0.9991.024/1.0129
EURGBPEuro/Pounds SterlingRenews the break under the 'Trough' KDR of 5 Nov (0.7042) and the fall to the lows of the broad trading band.0.703-0.5% 0.69360.725/0.7197
EURJPYEuro/Japanese YenFalls out of the m-t trading band/top. Intraday support is noted at 126.1136.96/133.39?
EURCHFEuro/Swiss FrancUptrend flattens.1.079-0.4% 1.0531/1.07131.2097/1.105
GBPJPYGBP/Japanese YenRetraces the 'Peak' KDR of 5 Nov, which was plotted near resistance at the mid-Sept high (188.316).187.268+0.2% 181.843/183.906195.885/188.316
GBPCHFGBP/Swiss FrancRenews the s-t rally to test resistance at the Sept ceiling (1.5411).1.535+0.1% 1.4467/1.50551.5589/1.5411
CHFJPYSfr/Japanese YenResumes the downtrend from the Jun ceiling towards the Mar floor.121.993+0.1% 119.917125.945/123.396
AUDJPYAustralian Dollar/Japanese YenDevelops support near the upper side of the prior small base. Tries to reassert the recovery.87.417+0.0% 81.92592.432/88.617
AUDAustralian Dollar/US DollarPauses the fall from the Aug high (0.744) above the Sept floor (0.6896). Revives base theory.0.7096-0.4% 0.68960.7849/0.744

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