Next Week Looks Key For USD
Dailyfx | Jul 24, 2013 11:29AM ET
- USD/CHF has declined steadily since failing at the 2x1 Gann angle line of the year-to-date high in the .9750 area
- While below the 4th square root progression of the year’s low at .9405 our near-term trend bias will remain lower in the rate
- Gann and Fibonacci levels between .9305 and .9325 look like the next downside pivot with clear weakness below needed to trigger another meaningful leg lower in the rate
- Near-term time cycle studies suggest Thursday is a minor turn window
- A close above .9405 is required to alleviate the immediate negative tone and turn us positive on the dollar
- NZD/USD has continued to move steadily higher since finding support near Fibonacci symmetry during the first half of the month
- While over .7860 our near-term trend bias will remain higher in the Bird
- The 4th square root progression of the year-to-date low in the .8030 is now key resistance and traction over this level is required to trigger a more important move higher
- A medium-term cycle turn window is seen early next week
- The third square root progression of the year’s low in the .7945 area is immediate support, but only weakness below .7860 will turn us negative on the Kiwi
- EUR/GBP has come under steady downside pressure since failing last week near the the 1st square root progression of the year-to-date high in the .8720 area
- However, while above the 2ndsquare root progression of the year-to-date low in the .8580 area our near-term trend bias will remain higher
- As such, the .8720 remains critical resistance with clear strength above this level needed to set up another push higher in the cross
- Near-term cycle studies warn that the next couple of days are a turn window
- Clear weakness back below .8580 will undermine the immediate positive structure in the rate and turn us negative
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It has been a couple of weeks since we last looked at the FXCM Dollar Index. The peak we were looking for in the index at the start of the month materialized right on schedule, but the correction that has followed has admittedly lasted longer than we expected as the index traded steadily lower through last week’s cycle turn window. The next turn window of significance for the index looks to be around the first half of next week and this is an ideal time for the broader USD uptrend to attempt to reassert itself. Continued USD weakness beyond this next turn window, however, would seriously undermine the positive cyclical picture that has been developing since early May. The 10,800 level looks like a key near-term pivot.
by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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