Last Week's Dollar Highs Breached To See Gains
Ian Copsey | Nov 05, 2015 12:00AM ET
Just as I had thought that everything was now under control, a snafu has to come along. Last week’s dollar highs were breached to see gains follow-through. The question is, are we seeing the start of a longer dollar bullish move, or did I make a misjudgment in the recent rally? What particularly bothers me is that USD/JPY broke above 121.63… We’re now, what, 5 or so weeks from the 48-week cycle low in USD/JPY, and given that the 125.85 high was way back in June, the downside progress has been extremely disappointing.
When looking at the Europeans, this additional strength in the dollar could still just be a slight misjudgment – particularly in EUR/USD. It is also noticeable that GBP/USD was looking stranded in terms of needing a second decline, while it looked like EUR/USD would move higher. Yesterday’s moves tend to provide a more correlated outlook. Even so, I’ll be taking a cautious outlook today just to confirm my thoughts and watch for stronger reversal indications to provide a consistent outlook across all pairs.
If I add AUD/USD to this puzzle, then the outlook appears bullish. Maybe it can edge a little lower today, but overall, I still think there’s another push higher to come – this being another argument for a correlated dollar bearish move over the coming month or so. Also, while I was concerned that yesterday morning that the dollar index outlook had not broken above 97.82, this additional dollar strength has satisfied that forecast – well, the reversal still needs confirmation and that’s a concern given the apparent bullishness in the dollar…
Therefore, today will be a day for testing these factors above, noting the dollar index needs to reverse lower if it is going to generate losses into the December period…
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