Monthly Analysis: Currencies

2022-09-01T12:32:09-05:00September 1st, 2022|Monthly|

The US dollar index ($DXY) closed the month of August at 108.70, up 2.80 for the month. This after extending its major (long-term) uptrend to a high of 109.48, taking out the July peak of 109.29. While the argument could’ve been made a possible double-top was in place, the strength of the monthly close indicated the major trend was not completed. Monthly stochastics were deep in overbought territory above 90%. Despite this, the USDX has extended the move already in September hitting a high of 109.98. For now we have to wait for a clear reversal pattern before calling a major top.

The euro (^EURUSD) extended its major downtrend to a low of 0.99007 durning August, its weakest reading since December 2002. However, despite monthly stochastics showing a sharply oversold situation the euro does not look to be in position to establish a bullish reversal pattern on its monthly chart, at least not yet. Thursday, September 1 finds the euro under pressure once again, posting a low of 0.99113 as it threatens a new low for the move.

The Canadian dollar (^CADUSD) closed lower for August, falling to a low of 0.76110 before settling just off that mark at 0.76144. The ongoing major downtrend is testing support at 0.75720, the 50% retracement level of the previous uptrend from 0.68170 (March 2020) through the high of 0.83269 (June 2021). If this support fails to hold the next downside target is 0.73938.

The Brazilian real (^BRLUSD) continues to go nowhere fast. August saw the real close at 0.19273, down fractionally from July when the currency posted a bullish spike reversal. There is no urgency for global investors to get interested in the real, so it sits. It’s possible the real could test support at its 4-month low of 0.18131 with a break of this mark possibly sending the currency back to the previous series of lows near 0.17440 from October 2021 through January 2022.

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