16 November 2020 | Currency update | USDollar looks weak(er) technically

covering USD Index, EUR/USD, GBP/USD, USD/JPY, GBP/EUR

USD Index	LT-M	MT-W	ST-D
92.71 (92.24)
Trend	↓ (↓)	↓ (↑)	↓ (↓)
% Risk Weight	14 (13)	33 (41)	32 (30)
Allocation	70% (70%)

16 November: The US dollar against majors rallied last week on the Pfizer vaccin news and fell slightly into this week’s opening. On today’s Moderna vaccin announcement markets responded very similar to last week but the dollar has not rallied to the same extend. Daily risk turned down again and Weekly risk trend turned down from up. This price chart consolidation between 92 and 94.5 actually makes the dollar look more vulnberable technically in spite of a Monthly low risk uptrend. We stay largely covered with 70% on long dollar exposures. No Change.

08 November: The Outlook we present is not the kind that triggers active trading, hence a slower update from tim to time. The trading volatility reflects presidential election jitters where the dollar weakened a few points 2 weeks ago and suddenly reversed last Friday as it became clearer than Biden was closing in. It will be interesting to see how the dollar behaves at opening Monday Nov 9 following the President elect call. Technically we can but follow the larger picture which looks for a medium term bullish divergence developing before we can see a bottom in the USDollar index. We have been in a 3% range now nearer the bottom end. A closing break of 91.75 could trigger a rapid drop into the 88 handle. The lower risk Long term Monthly risk level of 13 only becomes relevant to a new bull grend once Medium term and Short term show a serious oversold condition. No Change.

EUR/USD	LT-M	MT-W	ST-D
1.1826 (1.1867)
Trend	↓ (↓)	↑ (↓)	↑ (↑)
% Risk Weight	82 (82)	53 (52)	66 (62)
Allocation	70% (70%)

16 November: Euro/USD shows the same leading picture and the dollar index. Weekly turning up with daily up against an only mild overbought Monthly that is in a downtrend. The consolidation range between 1.16 and 1.19 therefore looks good for Euro in the medium term, i.e towards the end of the year at least. No Change.

08 November: Daily and Weekly price and risk bounced off of the 1.1700 handle support level. The coming week is needed for traders to position with the latest events in place. Tendency has been for Trump = bearish and Biden = bullish for Euro. That should not make a difference but it will until this market finds a real macro direction. We still favor a weaker dollar Medium and Longer term, keeping dollar receivables largely covered. No Change to 70% long dollar exposure cover..

GBP/USD (Cable)	LT-M	MT-W	ST-D
1.3186 (1.3138)
Trend	↓ (↓)	↑ (↑)	↓ (↑)
% Risk Weight	76 (76)	55 (45)	68 (65)
Allocation	50% (50%)

16 November: During the past 6 months GBP has not managed to climb above the dec 2019 1.35 high whilst risk weight actually moved to higher high with a lower price high. This alsdo indicates a mild bearish divergence and indicates a relatively weaker GBP in the major currency space. No change to the lower long dollar exposure cover at 50%.

08 November: Even though GBP has shown relatively more strength against dollar than Euro, the picture for cable isn’t that great technically. We still expect Sterling to find resistance against the dollar whilst the dollar continues to weaken against other majors. No Change to 50% dollar receivable cover.

USD/JPY	LT-M	MT-W	ST-D
104.57 (103.30)
Trend	↓ (↓)	↑ (↓)	↓ (↓)
% Risk Weight	35 (32)	21 (20)	65 (16)
Allocation	50% (50%)

16 November: Similar to GBP, Yen looks weaker in the major currency space and still appears to be building a bottom at the nearer par levels. No Change.

08 November: Dollar/Yen has been slightly weaker than expected yet still looks to develop more of a bottom in a long term declining channel that started in January 2017 and shows higher risk of Yen following the dollar rather than outperforming the greenback longer term. No Change.

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GBP/EUR	LT-M	MT-W	ST-D
1.1143 (1.1050)
Trend	↓ (↓)	↑ (↑)	↓ (↓)
% Risk Weight	37 (35)	62 (50)	51 (62)
Allocation	80% (80%)

16 November: We still call this cross to reach 0.90 long term. Present behavior is speculative whilst the technical picture appears to support fundamental long term weakness of the UK economy. No change maintaining a perpetual cover on long GBP transaction exposures.

08 November: Not much change the past two weeks with GBP ending 1/2% higher after two weeks. GBP IOO still reflects the economic vulnerability and reality of the UK going into an uncertain Brexit future and what ever the deal, Great Britain Ltd needs to improve its footing dramatically. No change to our much weaker outlook for GBP Medium and Longer term.

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