Have you been wondering about the US dollar strength and where it might be heading? The Dow Jones FXCM US dollar index which measures the value of the US dollar against a basket of the most liquid currencies in the world, has climbed to its highest level since it was created in January 2011. The ICE dollar indexe has also climbed to a four-year high.
US dollar has long been the “safe haven” and the go-to currency among the world’s investors, and its fall of 2008 created a global economic disaster.
Therefore, today we are going to focus on the US dollar, to whom we refer to as Ms. USA at Invest Diva. She has been pretty mighty these days against most of her major dancing partners on the forex dance floor. While Japan is struggling and throwing money into its banking system, Europe is considering a quantitative easing program of its own, and the Fed is winding down its bond buying program. But the key explanation for dollar strength could be the difference in growth rates between the US and the rest of the world.
On the forex dance floor, the US dollar has already broken above a number of key resistance levels against major counterparts, signalling that the door may have opened for further gains.
On the USD/JPY weekly dance floor, the pair has broken above the 61% Fibonacci and key resistance level of 105.30, and currently approaching the next key level and high of 2008 at 110.
On the USD/CHF daily dance floor we saw a formation of a Doji candlestick pattern on Monday after the pair broke above yet another key resistance level at 0.9452. The pair is now moving strongly towards the next bullish target.
A strong currency is good for investors who want to park their money somewhere safe, but not so good for exporters, For example in the US, when US dollar has a higher value, American products will appear more expensive in other countries.
So this is basically a battle between the investors and the exporters. While the pros and cons of a stronger dollar are very real, the investors sentiment can change very quickly and it’s probably still too early to say that Ms. USA will remain the queen of the currencies in the coming years.
Intraday Forex Technical Levels
EUR/USD 4-hour: Downtrend prevails.
Invest Diva Likes: Short positions below 1.2717 with targets at 1.2509 and 1.2385 in extension.
If Pair Goes Nuts: Above 1.2717 look for further upside towards 1.2771 and 1.2810.
What’s up on the Forex Dance Floor: The pair continues on an overall downtrend below the Ichimoku’s cloud with the RSI in the oversold zone.
Supports and Resistances
1.2717
1.2664
1.2565 Pivot Point
1.2509
1.2385
GBP/USD 4-hour: Dropping.
Invest Diva Likes: Short positions below 1.6171 with targets at 1.6060 and 1.5998 in extension.
If Pair Goes Nuts: Above 1.6279 look for further upside towards 1.6323 and 1.6398.
What’s up on the Forex Dance Floor: The pair is forming strong bearish candle and reached our bearish target at 1.6171 below the Ichimoku’s cloud. The RSI is heading to the oversold zone.
Supports and Resistances
1.6279
1.6227
1.6171 Pivot Point
1.6060
1.5998
AUD/USD 4-hour: Consolidating.
Invest Diva Likes: Short positions below 0.8743 with targets at 0.8659 and 0.8502 in extension.
If Pair Goes Nuts: Above 0.8743 look for further upside towards 0.8797 and 0.8839.
What’s up on the Forex Dance Floor: The pair is on an overall downtrend but is now consolidating around the 0.8743 level below the Ichimoku’s cloud. The RSI is rebounding from the neutrality area and moving down.
Supports and Resistances
0.8839
0.8797
0.8743 Pivot point
0.8659
0.8502
Intraday Commodities Technical Levels
Dow Jones Intraday: caution.
Invest Diva Likes: Short positions below 17080 with targets at 16835 and 16750 in extension.
Alternative scenario: Above 17080 look for further upside with 17150 and 17230 as targets.
Gold spot Intraday: under pressure.
Invest Diva Likes: Short positions below 1231.5 with targets at 1206 and 1200 in extension.
Alternative scenario: Above 1231.5 look for further upside with 1236 and 1243 as targets.
Crude Oil Intraday: supported by a rising trend line.
Invest Diva Likes: Long positions above 92.75 with targets at 95.6 and 96.1 in extension.
Alternative scenario: Below 92.75 look for further downside with 92 and 91.1 as targets.
