Monthly Analysis: Currencies

2022-05-01T14:56:28-05:00May 1st, 2022|Monthly|

The US dollar index ($DXY) extended its major (long-term) uptrend to a monthly close of 103.21. This took out the previous high monthly close of 102.21 from December 2016 and was the highest monthly close since 106.41 from November 2002. Monthly stochastics indicate the $DXY is sharply overbought, meaning selling could be seen at any time. However, from a technical point of view the new high monthly close has established a target near 115.30 (monthly close only). The long-term high is 120.22 from January 2002.

The euro (^EURUSD) extended its major (long-term) downtrend during April, closing the month at 1.05272. This sets the stage for what should be an interesting month of May as the previous low monthly close is now 1.05168 from December 2016. If the euro closes below this mark, the downside target  becomes 0.86212 (dashed red line). Note this would put the euro near the major low of 0.84580 from May 2001. Monthly stochastics indicate the euro I sharply oversold meaning buying could be seen.

The Canadian dollar (^CADUSD) extended the major (long-term) downtrend on its monthly close-only chart. April’s finish of 0.7774 was just below the November 2021 mark of 0.78249 with the next target near 0.76965. The latter marks the 50% retracement level of the previous major uptrend from 0.7108 (March 2020) through the high of 0.8285 (May 2021). Monthly stochastics are nearing the oversold level of 20%, but indicate there is still room to the downside.

The Brazilian real (^BRLUSD) has been strengthening since its low monthly close of 0.17407 (October 2020). From a technical point of view, it could be argued the real has completed a major (long-term) 5-wave uptrend on its monthly close-only chart with the March 2022 close of 0.21079 the Wave 5 peak. There has been no clear reversal yet, with support at the previous 4-month low close of 0.18846. Also, monthly stochastcis have not climbed above the overbought level of 80% for a bearish crossover.

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