Currencies

The US dollar index ($DXY): The US dollar index looks to be in a major (long-term) sideways to up trend. After posting a low monthly close of 96.75 this past June, the Index firmed to a high monthly close of 99.97 at the end of July. Then came a break to the low monthly close of 97.78 this past September followed by an October settlement of 99.80. The bottom line, from a technical point of view, is the Index is consolidating near the 61.8% retracement level of its previous uptrend near 98.32. However, monthly stochastics have not completed a bullish crossover below the oversold level of 20%, leaving the door open to another selloff. Looking ahead, the Fed fund futures forward curve is indicating another 25-basis point rate cut is likely in December, a fundamental reason for the US dollar to weaken. Theoretical Positions: Investors might’ve bought back previous short positions near the July close of 99.97. These shorts were established near the January 2025 close of 108.37 based on the completion of a bearish spike reversal. If investors are still short the market, based on the technical read of no new 4-month low monthly close, buy stops would be above the 99.97 settlement on a monthly close only order.

The Euro (^EURUSD): The euro continued to consolidate during November before settling at 1.15982, up 0.5% for the month. Monthly stochastics have not completed a bearish crossover above the overbought level of 80%, leaving open the possibility of the euro firming against the US dollar (see above). Key prices are the low monthly closes of 1.15374 (October 2025) and 1.14150 (July 2025) and high monthly closes of 1.17335 (September 2025) and 1.17873 (June 2025). Theoretical Positions: Investors could’ve liquidated previous longs and gone short the euro near the July close of 1.1415 or higher. If still holding long positions, sell stops would be below the October 2025 low of 1.15374.

The euro/Canadian dollar (^EURCAD) looks to be in the process of moving into a major downtrend. Monthly stochastics completed a bearish crossover above the overbought level of 80% at the end of October, a signal the trend could soon turn down. The EURCAD closed November at 1.62075, up 0.26% for the month. Theoretical Positions: Previous long positions could’ve been liquidated and new short positions established near the July settlement of 1.58165. Buy stops would’ve been triggered above the July high of 1.61301, resulting in a loss of 0.03136. It’s possible traders might’ve gone long near the August settlement of 1.60599. If so, these positions could be liquidated near the October settlement for a gain of 0.0106. If new short positions are established, buy stops would be above the September settlement of 1.63332.

The Canadian dollar (^CADUSD) still looks to be in a major uptrend, despite the continued break from the June 2025 high monthly close of 0.73483. The loonie finished November at 0.71542, up 0.24% for the month. Note the weakening has held the 50% retracement level of the initial rally near 0.71152. Theoretical Positions: Investors would’ve bought back short Canadian dollar positions near the February settlement of 0.69125 and gone long at the same level. Additional buy orders could be established near the November settlement of 0.71542, creating an average long position of 0.70334, a price near the 61.8% retracement level of the initial rally.