The US dollar index ($DXY): Despite last month’s consolidation the US dollar index still looks to be in a major (long-term) downtrend. The $DXY closed the month at 99.33, down 0.14 for the month. If the Fed has to eventually raise rates to combat inflation, it could bring buying back to the dollar. Theoretical Positions: Investors are likely on the sidelines at this time.
The Euro (^EURUSD): The euro also consolidated last month but remains in a major uptrend. 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 established new long positions 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 closed May at 1.13477.
The euro/Canadian dollar (^EURCAD) also consolidated during May. 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 1.47321 (February 2025). The EURCAD settled May at 1.5590.
The Canadian dollar (^CADUSD) extended its major uptrend to a high of 0.73063 during May before closing at 0.72784, up 3.14 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 May, hitting 0.17911 before settling at 0.17468, down 0.89% for the month. Theoretical Positions: Investors likely bought at the new 4-month high during March and again during April, putting the position at an average of roughly 0.17815.
P.S. If there are other currencies you’d like to see covered, please let me know. Thank you.
