Littlefish FX | Sep 19, 2013 03:29AM ET
We find ourselves in an unusual predicament. Risk currencies were already looking quite overbought before Bernanke dropped the bombshell and pushed everything even further. We’re now stretched uncomfortably to the upside with market sentiment clearly showing intentions of further upside, but with levels where they are, we could definitely do with some dollar relief. USD% index RSI was at an eye watering 13 earlier and retail order-books are very in the red, but with the Fed still maintaining the full asset purchase and uber-dove Yellen likely to take the helm, the printing press seems sure to see more action until fundamentals in the US are a lot better, which given the downturn in performance lately could be some time yet. This in turn has a knock-on effect globally with Draghi ad Carney’s tasks of maintaining growth now significantly more difficult. Expect a step-up from the BOE and the ECB to try to counter the effects of the weakening dollar. Perhaps more of a problem though is Japan, who’s massive stimulus program seems to have stopped holding the Yen lower, so this dramatic weakness from the US dollar will cause even more issues for Japan’s huge experiment. A backfire there and we’ll be praying for a return to the good old days of peripheral European insolvency.
USD% Index
USD% Index Resistance (EURUSD support): EURUSD 1.3450, 1.3420, 1.3364
USD% Index Support (EURUSD support): EURUSD 1.3617, 1.3691
EUR% Index
EUR% Index Resistance: EURUSD 1.3582, 1.3661, 1.3825
EUR% Index Support: EURUSD 1.3500, 1.3461, 1.3400
EURUSD Trade Positioning
My Short from 1.3347 hit stops for a loss and I have a limit order to buy EURUSD from 1.3461, stops below this week’s low.
JPY% Index
JPY% Index Resistance (USDJPY Support): USDJPY 97.64, 97.35, 96.4
JPY% Index Support (USDJPY Resistance): USDJPY 98.60, 100.00, 103.00
USDJPY Trade Positioning
My longs hit stops and I am now short from 97.21
GBP% Index Resistance: GBPUSD 1.6166, 1.6267
GBP% Index Support: GBPUSD 1.6014, 1.5917
AUD% Index
AUD% Index Resistance: AUDUSD 0.9525, 0.9570, 0.9689
AUD% Index Support: AUDUSD 0.9525, 0.9480
CHF% index
CHF% Index Resistance (USDCHF support): USDCHF 0.9116, 0.9094, 0.9050
CHF% Index Support (USDCHF resistance): USDCHF 0.9173, 0.9184, 0.9200
CAD% index
USDCAD Trade Positioning
My USDCAD longs were stopped out and I now remain sidelined until we meet the top of the channel.
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