The US dollar index ($DXY): From a technical point of view, the US dollar index looks to have moved into a major (long-term) downtrend as it fell to a low of 97.92 during April. This was its weakest reading since March 2022. The $DXY closed the month at 99.47, making April the fourth consecutive lower monthly close. Frankly, I’m not putting much stock in technical analysis these days. Fundamentally, the US Fed will likely have to take a more cautious approach with interest rates given inflation tied to trade wars and tariffs is expected to heat up again. If the Fed has to eventually raise rates, it could bring buying back to the dollar. Theoretical Positions: If long-term investors bought near the November close of 105.78 in early December based on that month’s new 4-month high, these positions might’ve been lifted near the January settlement of 108.37 in early February based on January’s completion of a bearish spike reversal. Investors are likely on the sidelines at this time.
The Euro (^EURUSD): The euro extended its rally to a high of 1.15729 during April, its strongest reading since November 2021. The euro closed last month at 1.13291, up 0.05139 (4.75%) from its March settlement. Technically, we see a new low of 1.017766 was posted during January before the euro closed at 1.03595, up fractionally for the month. This coincided with a bullish crossover by monthly stochastics below the oversold level of 20%. This means the euro both signaled (stochastics) and confirmed (reversal pattern) a new major uptrend. Theoretical Positions: It’s possible long-term investors sold the euro during November, either at the breakout point of 1.078 or the November settlement of 1.08836 during in early December. If so, these positions would’ve been bought back and new longs established near the January close of 1.03595 with sell stops below the January low of 1.01776. It’s also possible, given the unstable political situation in the US, the euro could continue to take the spotlight from the US dollar.
The euro/Canadian dollar (^EURCAD) extended its March bullish breakout during April, reaching a high of 1.59604 before settling at 1.56323, up 0.45% for the month. Theoretical Positions: Buy orders would’ve been filled above the previous 4-month high of 1.51711 during March, with sell stops placed below the previous 4-month low of 1.46854 (January 2025).
The Canadian dollar (^CADUSD) jumped to a new 4-month high during April, taking out the previous mark of 0.71487 before closing at 0.7247, up 4.27% for the month. The loonie turned long-term bullish at the end of February as it completed a bullish key reversal on its monthly chart. This also coincided with monthly stochastics establishing a bullish crossover below the oversold level of 20% meaning the loonie both signaled (stochastics) and confirmed (reversal pattern) the new major trend. 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. Sell stops would be placed below the February low of 0.67604.
The Brazilian real (^BRLUSD) extended is uptrend to a new 4-month high during April, hitting 0.17875 before settling at 0.17625, up 0.55% for the month. Theoretical Positions: Investors likely bought at the new 4-month high during March, putting the position at 0.17740. Previous short positions might’ve been covered near the January settlement of 0.17118 based on what looked to be a bullish 2-month reversal.
P.S. If there are other currencies you’d like to see covered, please let me know. Thank you.
