Analys från DailyFX

DXY Breaks Below 3-yr Trendline, Bucks Seasonal Trend

Published

8 år ago

18 maj, 2017

DailyFX

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Talking Points:

DXY Technical Strategy: DXY in favorable technical set-up for a moderate bounce
JPY strength in the wake of recent political turmoil also likely to weight on DXY
EUR strength expected to continue making DXY gains tough to come by

The dollar has been a bit of a whipping boy of late as bad data continues to stack up for the currency that was expected to be the darling of G10FX in 2017. The Dollar Index (DXY) traded at new 2017 lows on Wednesday after concerns grew on whether or not the current US administration would be able to progress their inflation inducing agenda. The hope that had surfaced at the election of President Trump was expected to align nicely with the reduction of accommodation from the Federal Reserve.

For a quick trip to the land of economic theories, traders can dust off their textbooks to locate the Mundell-Fleming model, which helps explain expected the impact on exchange rates in the short-term when monetary and fiscal policies diverge. The hope that Dollar bulls had was that we were about to witness a nice combination of relatively restrictive monetary policy as the Fed hiked rates and mused about reducing their $4.5T balance sheet while the administration led an expansionary Fiscal policy of the world’s reserve currency.

However, we’ve seen bond markets less than confident that the restricting monetary policy efforts fo the Federal Reserve will come to pass in the coming years. At the same time, doubts are growing about how much fiscal policy (infinitely harder to approve than monetary policy in the current framework), will expand given the drama that has surfaced out of the US capital.

Despite the economic models, economic weakness compared to prior expectations and political drama have led to significant DXY weakness, which has helped propel EUR/USD to 2017 highs. Traders looking at the chart should keep an eye on the 3-year Trendline acting as new resistance. The Trendline is currently +100 points away from Thursday’s spot at 98.80. An inability for the price to close above 98.80 would favor a continuing trend of DXY weakness toward the November low of 95.89.

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DXY trading at levels not seen since Election Day. Weak upside anticipated over reversal

Chart Created by Tyler Yell, CMT

IG Client Sentiment Highlight: EUR (57.6% of DXY) Sentiment Favoring Further Upside

EURUSD: As of May 18, retail trader data shows 26.0% of traders are net-long with the ratio of traders short to long at 2.85 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.06101; the price has moved 5.0% higher since then. The number of traders net-long is 8.7% lower than yesterday and 36.9% lower from last week, while the number of traders net-short is 2.7% higher than yesterday and 29.7% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EURUSD-bullish contrarian trading bias (Emphasis mine)

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Shorter-Term DXY Technical Levels: Thursday, May 18, 2017

For those interested in shorter-term levels of focus than the ones above, these levels signal important potential pivot levels over the next 48-hours.

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Written by Tyler Yell, CMT, Currency Analyst Trading Instructor for DailyFX.com

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Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

Published

7 år ago

30 september, 2017

DailyFX

What’s inside:

EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
Resistance in vicinity of 11825/80 likely to keep a lid on further strength
Targeting the low to mid-11600s with more selling

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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.

Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.

Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).

Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.

For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.

EURUSD: Daily

—Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at@PaulRobinonFX.

Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

Published

7 år ago

29 september, 2017

DailyFX

Euro Bias Mixed Heading into October, Q4'17

Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.

EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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Analys från DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Published

7 år ago

29 september, 2017

DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.

GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form