The US dollar index ($DXY): Despite posting another lower monthly close at the end of August, the US dollar index still looks to be in a major (long-term) uptrend that was confirmed as the greenback posted a new 4-month high during March 2026. However, it is not a clear, or particularly strong trend. Recall the June high of 101.80 was a test of the 50% retracement level of the previous major downtrend at 101.99. Theoretical Positions: Investors would’ve gone long this past March at the new 4-month high near 100.40. The Index closed August at 99.43, down 0.48 for the month.
The Euro (^EURUSD): Despite posting another higher monthly close at the end of August, the euro still looks to be in a major downtrend that was confirmed as it posted a new 4-month low during March 2026. The 50% retracement level of the previous major uptrend is down at 1.11291. Theoretical Positions: Investors are either short the euro near 1.14689 (March 2026) or near 1.14110 (June 2026). If short at both levels, the average position would be roughly 1.144. The euro closed August at 1.16174, up 0.00884 for the month.
The Euro/Canadian dollar (^EURCAD) continued to consolidate during August before closing at 1.60944, down 0.00649 for the month. In September, the previous 4-month low is down at 1.59041 with sell orders possibly below that level. Theoretical Positions: Short positions could’ve been established near the October 2025 settlement of 1.61659 with additional positions below the December low of 1.60618. This puts the average short position at roughly 1.61135.
The Canadian dollar (^CADUSD) Despite posting another higher monthly close at the end of August, the loonie still looks to be in a major downtrend. Theoretical Positions: Investors would’ve liquidated long positions from the close of February 2025 (0.69125), adding positions along the way as the loonie took out previous high marks, including January above the previous peak of 0.73854 from June 2025, below the previous 4-month low of 0.71604. New short positions would’ve been established at the same price. However, given the trade war the US started with Canada, investors may want to move to the sidelines as the world may look to support the Canadian dollar and sell the US dollar.
The Brazilian real (^BRLUSD) consolidated during August before closing at 0.19283, down 1.9% for the month. I still see the real in a major downtrend following its key reversal during May, a pattern that coincided with a bearish crossover by monthly stochastics above the overbought level of 80%. A test of the May high would be considered a Wave B (second wave) rally with the 3-wave downtrend. Theoretical Positions: Investors long near the January 2025 settlement of 0.17188, based on a bullish 2-month reversal, would’ve liquidated those positions near the May settlement of 0.19785 locking in a gain of approximately 0.02597. New short positions were established at the same May settlement price.
