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FX Daily Hotline 
19 March 2015     By C Dichio, Analyst

Chart of the day: EUR reasserting down already?

 

The FED delayed raising interest rates yesterday and the US Dollar suffered a knee-jerk reaction.  The Euro, for instance, gained 2.5%.  Technically, the previous decline had been oversold for most of the month (see low level of the RSI) and a rebound from US$1.0458 was noted.

However, at the time of writing, the single European currency is priced at US$1.0652.  This means that it has retraced a good portion of Wednesday's bounce; as the rate remains confined by downtrend resistance at the 50-day moving average.

 

Daily Comment:

 

The Euro possesses the largest stake in the US Dollar Trade Weighted Index, at over 50%.  Hence, the chart pattern looks the inverse to the Chart of the Day.  Resistance has been encountered near the psychological 100 number, as the gauge corrects from overbought towards uptrend support at the 50-day moving average. 

The US$ was trading up against all six members a short time ago.  Perhaps the uptrend is already being reasserted.

We continue to hold a long trade in the US Dollar versus its neighbouring Canadian Dollar (the C$ holds a 9.1% weighting in the US$ Index).  Currently changing hands at C$1.2672, the US unit is rebounding from support at the range lows near C$1.2350; near the shorter-term MA, and is probably reasserting the uptrend.  The stop is raised to C$1.2300.

The Australian Dollar bounced to downtrend resistance near the 50-day MA versus its US cousin.  That barrier is also reinforced by the 'Peak' Key Day Reversal of 26 February, plotted at US$0.7913.  In fact, this morning sees the Aussie reacting to that downtrend channel, as it currently trades at US$0.7678.  Nonetheless, we would wait for the dust to settle before considering shorting the pair.

Elsewhere, the Swiss Franc has bounced versus the Japanese Yen.  Gaining 1.8% yesterday, the Swissie has found support near the 200-day MA, around Y120; pausing the decline towards the January low, which had become oversold.  If potential resistance near the shorter-term MA can be overcome, the next chart target is around Y130.

 

Gainers / Losers
Top 5 Gains.
SymbolStockClose% Change
NZDNew Zealand Dollar/US Dollar0.7488+2.5%
EUREuro/US Dollar1.0864+2.5%
AUDAustralian Dollar/US Dollar0.7774+2.1%
CADUSDCanadian Dollar/US Dollar0.7957+1.8%
CHFJPYSfr/Japanese Yen122.779+1.8%
Top 5 Losses.
SymbolStockClose% Change
RUBRussian Ruble per 1 US Dollar59.448-3.3%
CHFUS$/Swiss Franc0.9784-2.8%
DXYUS Dollar Index97.202-2.5%
DKKUS$/Danish Krone6.8616-2.5%
USDEURUS$/Euro0.92-2.5%
    
The FX Model Portfolio
Foreign Exchange Model Portfolio Longs
Date Stock Code Type Open Price Current Price % P&L Target Stop
13 Mar 2015 US$/Canadian Dollar CAD Long 1.2783 1.2566 -1.70% 1.23
Foreign Exchange Model Portfolio Shorts
Date Stock Code Type Open Price Current Price % P&L Target Stop
5 Mar 2015 Euro/Norwegian Krone EURNOK Short 8.5186 8.8721 -4.15% 8.95
  • The stop on the long is raised.
  • We watch to sell A$ v US$.

 

Daily Analysis

Symbol Name Comment Close 1 day Support Resistance
DXYUS Dollar IndexCorrects from overbought towards uptrend support at the 50-day MA.97.202-2.5% 91.514/93.25102.15/100.39
EUREuro/US DollarCounter rally from oversold fall towards downtrend resistance at the 50-day MA.1.0864+2.5% 0.9613/1.04581.26/1.1534
GBPUSDBritish Pound/US DollarVolatile trading day on Wed. Rebounds from oversold but intraday resistance is noted at 1.5166.1.4978+1.6% 1.4231/1.46351.5552/1.5137
CADUS$/Canadian DollarPauses the advance towards the 2008/2009 ceiling. Falls back to uptrend support at the 50-day MA.1.2566-1.7% 1.1803/1.2352?1.3065/1.2835
JPYUS$/Japanese YenExtends the m-t trading band following the early-Mar failed move over range resistance at the early-Dec high (121.85).120.11-1.0% 113.86/115.57124.14/122.03
ZARUS$/South African RandCorrects from overbought towards potential support from the mid-Dec/early-Mar trading band.12.0626-2.4% 11.2575/11.362613.8401/12.65
KRWSouth Korean Won per 1 US DollarOverbought s-t rally finds intraday resistance at 1137.46.1129.77+0.1% 1094.6/1121.19?1152.7
CHFUS$/Swiss FrancOverbought advance pauses beneath the Jan high.0.9784-2.8% 0.7406/0.85011.0676/1.0241.0129
EURGBPEuro/Pounds SterlingOversold and accelerated decline finds support near the upper side of the 2003-2007 trading band. Recovery towards the 50-day MA follows.0.7254+1.0% 0.6894/0.70140.7715/0.7592
EURJPYEuro/Japanese YenRebound from oversold. Finds support above the mid-Apr/Jun 2013 floor near 125.130.5+1.5% 118.73/124.94137.64/136.7
EURCHFEuro/Swiss FrancRally from the mid-Jan floor loses momentum after the 'Peak' KDR of 20 Feb.1.0627-0.3% 0.85171.2097/1.0812
GBPJPYGBP/Japanese YenExtends the s-t fall to intraday support at 177.163.179.914+0.5% 171.077/175.508187.803/185.033
GBPCHFGBP/Swiss FrancOverbought advance finds resistance at 1.5195; within mid-May 2014 to mid-Jan supply. Retraces.1.4653-1.3% 1.1729/1.44221.5589/1.5195
CHFJPYSfr/Japanese YenPauses the fall towards the Jan low. Finds support near the 200-day MA.122.779+1.8% 114.085/119.917155.367/130.069
AUDJPYAustralian Dollar/Japanese YenRecovery from the oversold early-Feb low yields to ranging by resistance near the 50-day MA.93.411+1.0% 88.244/89.37798.415/94.627
AUDNZDAustralian Dollar/New Zealand DollarReaction from the 50-day MA and 'Peak' KDR of 11 Mar reverses above the early-Mar record low, with a 'Trough' KDR.1.0384-0.4% 1.02831.0798/1.0531
AUDAustralian Dollar/US DollarBounces to downtrend resistance at the 50-day MA; and 'Peak' KDR of 26 Feb.0.7774+2.1% 0.7451/0.75610.8025/0.7913


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