steve.jarvis's picture

US Dollar still the leader of the pack, but for how much longer?

Regular readers of my blog will know I've been a US Dollar bull for many a month.  Since last July to be precise. It has been number 1 in my rankings for 21 out of the past 30 weeks, having not been lower than 2nd in all that time. Thought it about time I revisited the US Dollar, having last featured it in it's own right in my 5th November 2014 entry entitled "A fistful of Dollars still seems to be the way of the World".  Given the pace of the recent US Dollar appreciation, is it still worth backing?  If so, against which Currencies?  Or might it be time to consider taking US Dollar profits and now turning attention elsewhere?

I find that weekly candlestick charts are a very useful tool to gauge the main underlying trend and the extent of an existing overbought or oversold condition.  IE the degree of potential short-term risk which exists without altering the underlying trend.  Looking at the US Dollar against the other (top ten) major currencies, it is clear the US Dollar is in a very strong uptrend against the EUR, JPY, CAD, AUD, NOK & SEK.  In all of these cases the 13, 52 & 260 week moving averages for the US Dollar are positively aligned and rising. Against the GBP, CHF & NZD, the major trend for the USD is less clear.  Could these latter three Currencies perhaps offer a lower risk entry for continued US Dollar strength? 

Sometimes when you have existing positions which are well into profit, it can seem as if there is little need to do anything.  At such times, it is maybe worth taking a step back and asking yourself "if I didn't have a trade already running, would I wish to enter the market at current levels?" If the answer is no, then maybe it's time to be thinking about taking some profits, if only on a reversal under a key higher low.  Perhaps with a view to re-entering the market at lower levels.

Would I be happy buying the US Dollar against the likes of the EUR, JPY, CAD, AUD, NOK & SEK at current levels?   Probably not for many of them, but I do see the US Dollar broadly higher over the coming months, it's just that between now and then there may be better entry levels. 

A selection of the US Charts mentioned above are shown below.  Starting with the strongest / most extended ones first, before moving onto the laggards or those which potentially offer a lower risk in the event of a broad-based US Dollar setback.  Come to your own conclusion as to which ones may be at the greatest risk in the event of a US Dollar setback.  

Charts from left to right. USDEUR, USDCAD, USDNOK, USDSEK.





Charts from left to right. USDJPYUSDAUDUSDCHF, USDNZD.





Have you taken a look at TraderMade's FX Analysis service recently?  There have been major upgrades over recent months including our own in-house Economic Analysis to complement our award-winning Technical Analysis. For a live sample page of our award-winning service (the featured market is changed most days) please see where there are links to request your free 1 week trial (alternatively)