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FX Daily Hotline 
8 April 2014     By C Dichio, Analyst

Chart of the day: DXY recovery pauses

 

The US Dollar Trade Weighted Index has failed to maintain the nudge over the late-February high at 80.578.  Note that this is close to the lateral level that runs across the picture near 80.50.  Resistance has been encountered at 80.599, which is close to the 200-day moving average.  The failure presents scope for a 'bull trap' pullback over the short term, initially towards the last reaction low at 79.752, and possibly the December-March floor after that.

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

 

Daily Comment:

 

Against the Turkish Lira, the US Dollar is currently changing hands at TL2.1013.  The decline is extending towards potential support from the September high (TL2.0841); and the 200-day moving average.  The RSI is close to oversold levels, increasing the danger of a counter move before long.  We remain short and tighten the stop to TL2.1250; just over Monday's high.

The stop on the short trade held in the US$ v Brazilian Real is lowered to BR2.30 (see 'Losers' for the chart). 

The Australian Dollar's rally against the New Zealand Dollar is showing a slight loss of momentum near the February ceiling.  However, the pattern developing over the last few months still could turn out to be a base formation.  We watch to purchase a breakout, requiring a move through this year's earlier high at NZ$1.0948 (see also hotline for 3 April). 

In yesterday's report, we pointed out that although the Aussie had pushed ahead again versus the Swiss Franc and Euro, there was potential resistance nearby from the longer-term MAs; and indicators were overbought.  Today, the A$ appears on the 'Losers' table v these Europeans, as the correction begins.

Similarly, the Australian currency has begun to unwind from overbought against the Japanese Yen.  We watch to buy the A$, possibly around the Y94 region where old resistance in that area has the potential to convert into a platform, for the eventual renewed advance towards Y100 (see also Chart of the Day section for 2 April).

 

 

Gainers / Losers
Top 5 Gains.
SymbolStockClose% Change
BRLGBPBrazilian Real/Pound Sterling0.2719+1.1%
RUBRussian Ruble per 1 US Dollar35.6383+1.0%
LACILatin America Dollar Index94.17+0.6%
EURAUDEuro/Australian Dollar1.48233+0.5%
GBPAUDGBP/Australian Dollar1.7916+0.4%
Top 5 Losses.
SymbolStockClose% Change
AUDBRLAustralian Dollar/Brazilian Real2.057-1.0%
BRLUS$/Brazilian Real2.2189-0.8%
AUDCHFAustralian Dollar/Swiss Franc0.8232-0.7%
AUDEURAustralian Dollar/Euro0.6746-0.5%
SEKUS$/Swedish Krona6.5259-0.5%
    
The FX Model Portfolio
Foreign Exchange Model Portfolio Longs
Date Stock Code Type Open Price Current Price % P&L Stop Comment
23 Jan 2014 Euro/Mexican Peso EURMXN Long 18.3544 17.8755 -2.61% 17.5
Foreign Exchange Model Portfolio Shorts
Date Stock Code Type Open Price Current Price % P&L Stop Comment
12 Feb 2014 Euro/Pounds Sterling EURGBP Short 0.81906 0.82739 -1.02% 0.84
28 Feb 2014 Euro/Swiss Franc EURCHF Short 1.21671 1.2202 -0.29% 1.2275
6 Mar 2014 US Dollar Index DXY Short 79.686 80.232 -0.69% 80.7
19 Mar 2014 Canadian Dollar Index TWI CDSP Short 135.85 139.28 -2.52% 141
31 Mar 2014 New Turkish Lira per 1 US Dollar TRY Short 2.1626 2.1105 +2.41% 2.125
4 Apr 2014 US$/Brazilian Real BRL Short 2.2358 2.2189 +0.76% 2.3
  • Stops are lowered on short US$ v Turkish Lira and Brazilian Real.
  • We watch to buy A$ v NZ$ and Yen.

 

Daily Analysis

Symbol Name Comment Close 1 day Support Resistance
DXYUS Dollar IndexPauses the recovery. Failed nudge over the late-Feb high (80.578).80.232-0.2% 79.268/79.75281.482/80.599
EUREuro/US DollarHolds the s-t down bias.1.3742+0.3% 1.3477/1.36431.4247/1.3967
GBPUSDBritish Pound/US DollarChoppy l-t uptrend, but s-t drift occurs from the Feb/Mar highs.1.6608+0.2% 1.6252/1.6461.7043/1.6823
CADUS$/Canadian Dollar'Bull trap' reaction probes support at the Feb/Mar floor.1.0975-0.1% 1.0911/1.09561.1725/1.1279
JPYUS$/Japanese YenFailed break over the Mar high (103.76) with a 'Peak' KDR.103.1-0.2% 100.76/101.2105.44/104.13
ZARUS$/South African RandReasserts the s-t downtrend to the sideways area along 10.5.10.5282-0.3% 10.218311.109/10.9779
KRWSouth Korean Won per 1 US DollarRetreats from the early-Feb high to the Dec/Jan floor.1055.45+0.2% 995.85/1048.11102.59/1089.71
CHFUS$/Swiss FrancPauses the recovery towards the 200-day MA.0.8879-0.5% 0.8699/0.87870.9156
EURGBPEuro/Pounds SterlingHolds the retreat from resistance by the late-Dec high near 0.84.0.82739+0.1% 0.80817/0.815770.84668/0.84049
EURJPYEuro/Japanese YenRally from the 'Trough' KDR of 28 Mar baulks at the early-Mar high.141.67+0.1% 136.23/138.68145.69/143.79
EURCHFEuro/Swiss FrancRecovery finds resistance at the Feb high; near the 200-day MA.1.2202-0.2% 1.20625/1.210441.22607
GBPJPYGBP/Japanese YenStill finding resistance at the top of the m-t band; beneath the Jan high.171.225+0.0% 163.889/167.78174.85/173.655
GBPCHFGBP/Swiss FrancHolds the recovery within supply set down from Jan to early-Mar.1.4745-0.3% 1.4376/1.44681.4978/1.4866
CHFJPYSfr/Japanese YenRally from the 'Trough' KDR of 28 Mar baulks at the Mar high.116.111+0.3% 111.7/114.156119.184/117.864
AUDJPYAustralian Dollar/Japanese YenOverbought rally from the 'Trough' KDR of 17 Mar shows a loss of momentum.95.575-0.4% 90.059/91.085102.94/96.515
AUDNZDAustralian Dollar/New Zealand DollarRally from the late-Jan trough (close to the late-2005 floor) slows by the highs of the potential base.1.0775-0.3% 1.0432/1.04931.0948/1.076
AUDAustralian Dollar/US DollarOverbought rally from the s-t base slows.0.9289+0.2% 0.8634/0.88910.9448/0.9295?


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