The US dollar index ($DXY) remains in a major (long-term) downtrend on its monthly chart with a downside target near 99.00. While the $DXY rallied during May, monthly stochastics above the oversold level of 20% indicate there is time and space for the index to move lower. 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. However, the euro did complete a bearish 2-month reversal during May, opening the door to a possible selloff back to the target area between 1.04994 and 1.03155. If so, the euro could bottom out during July. The previous 4-month low is 1.05169 from March. Theoretical Positions: Traders could be long the euro from the September 2022 close of 0.98024 based on a bullish crossover by monthly stochastics at the end of that month. Additional longs might’ve been established during November 2022 when the euro moved to a new 4-month high.
The euro/Canadian dollar (^EURCAD) looks to have rolled over into a major downtrend as it completed a bearish 2-month reversal at the end of May. The difference between this spread and the euro itself is the pattern with the spread confirmed a bearish crossover by monthly stochastics above the overbought level of 80% at the end of February. The downside target area is between 1.45278 and 1.37302. Theoretical Positions: Traders could liquidate longs from the August 2022 close of 1.31904 near the May 2023 close of 1.45107 (a gain of 0.13203) and establish new short positions (short euro/long Canadian dollar). If so, then stops would be placed above the 4-month high of 1.51118 from April 2023.
The Canadian dollar (^CADUSD) remains in a major uptrend on its monthly chart. Initial resistance is at the previous 4-month high of 0.75398 from February 2023. Theoretical Positions: Traders could be long from the October 2022 close of 0.73395 with a stop below the March 2023 low of 0.72146. Additional longs could be established near the March settlement of 0.73975, putting the average long near 0.73685.
The Brazilian real (^BRLUSD) still looks to be in a major sideways trend. Theoretical Positions: New long positions were established when the real took out its previous high of 0.20214 from February. The upside target is near the April 2022 high of 0.21773. Sell stops would be placed below the previous 4-month low of 0.18734 from March 2023.
