Monthly Analysis: Currencies

2023-04-02T13:08:58-05:00April 2nd, 2023|Monthly|

The US dollar index ($DXY) remains in a major (long-term) downtrend on its monthly chart with a downside target of 99.11. Meanwhile, the secondary (intermediate-term) and minor (short-term) trends still look to be up. Theoretical Positions: Traders may have shorted the dollar near the September and October closes of 112.00.

The euro (^EURUSD) remains in a major uptrend with the next upside target near 1.12746. Key resistance is the February high of 1.10326. Theoretical Positions: Traders could be long the euro from the September close of 0.98024 based on a bullish crossover by monthly stochastics at the end of that month. Additional longs might’ve been established in November when the euro moved to a new 4-month high.

The euro/Canadian dollar (^EURCAD) extended its major uptrend to a high of 1.49388 during March before pulling back to close at 1.46554. This was enough for monthly stochastics to establish a bearish crossover above the overbought level of 80%, a signal the major trend could turn down. We need to keep an eye out for a potential reversal pattern. Theoretical Positions: Traders could be long from the August close of 1.31904. Additional longs might’ve been established with the new 4-month high beyond 1.36955 during November. This puts the average long near 1.3443. Stops could be placed below the January low of 1.4236.

The Canadian dollar (^CADUSD) remains in a major uptrend on its monthly chart. March saw the loonie post a bullish spike reversal indicating Wave 2 of the 5-wave pattern had bottomed with Wave 3 expected to take out the Wave 1 high of 0.75398. Theoretical Positions: Traders could be long from the October close of 0.73395 with a stop below the October low of 0.71550. Additional longs could be established near the March settlement of 0.73975, putting the average long near 0.73685.

The Brazilian real (^BRLUSD) remains in a major sideways trend, though recent activity is hinting at an upside breakout. Theoretical Positions: Traders might be selling options to take advantage of the range between July low of 0.18131 and August high of 0.19949. Otherwise, new positions will depend on a breakout of either side of the range.

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