A Macro Perspective On the Dollar’s Rally


We found this chart to be quite interesting. We are using a weekly chart below and what we clearly see is the range the CAD has been trading versus the Greenback. On a daily chart you can get a better sense of volatility but this weekly chart shows that in fact this pair has gone no where. However, the CAD’s recent weakness has brought it to a key Support level. A solid close above Support will likely have the CAD testing major Support on the daily at 1.0850 which is also currently coinciding with the 200 day MA on the weekly chart. One last note here, when the CAD has lost 3 weeks in a row it has always been followed by at least a fourth with one exception over the last 2 years.


Analyzing the weekly EUR chart below the EUR appears to be in the early stages of a retrace. Yesterday’s price action closed precisely at the Fibonacci 23.6% level generated from the 2009 high to the 2010 low. The EUR was not fully able to retrace the Dollar’s move that initiated the break lower on the initial close below 1.3350 (See horizontal black line), suggesting that inherent weakness is rebuilding. In addition, the the 50 MA is within striking distance of a close below the 100 MA, thereby placing the EUR back under considerable pressure. Thus a solid close below the 23.6% Retrace level (1.26 or lower, on the weekly) may send the EUR closer to 1.20 once again.


After a brief period of consolidation on the weekly JPY chart below the JPY has resumed its downward trend against the Greenback. The prior low established in November of 2009 at 84.70 is currently being tested by this weeks candle as it tries to close below that level of Resistance. The major moving average clearly favor a continuing strengthening JPY. Unless we see the JPY break north of trend line Support the JPY will most likely continue trending lower. Most analysts see a 79 or 80 handle establishing a true bottom for this pair.

Written by bforex.com