2020 Forex forecast 14-21 Febr

2020 Foreign Exchange forecast 14-21 Febr

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

USdollar Index Weekly Dollar Index Price Risk Analysis Forecast

(Previous week in brackets)

USD Index LT-M MT-W ST-D
99.16 (98.70)
Trend ↑ (↑) ↑ (↑) ↑ (↑)
% Risk
Weight
58 (55) 75 (65) 97 (92)
Allocation 100% (100%)


The dollar and the dollar index clearly need to be given space and time to face the reality of a severe correction. Even though it seems like today’s markets are very different from a historic perspective, they are not. What is different is the extension length of trends in contemporary financial culture and risk awareness, or rather lack of it. We may all suffer as a result in due course, so we just try and deploy damage limitation. The process of ending this dollar uptrend is so frustratingly slow that it is hard to play any short term risk weight. The LT monthly however is very likely to show bearish divergence some time in the next 6 months or reverse to continue the downtrend that started in Oct 2019. No Change in remaining fully covered on Dollar receivables against other majors.

Last week: The firm dollar past week is US equity demand and commodity trader supply related. The dollar index was strong and against our risk protection position which is aimed at Medium term and Long term transaction risk from dollar flows related to physical business, import/export, transactions. We stay firm on maintaining a full hedge on dollar receivables. Losing a few percent on this cost of goods sold position in the short term is weighed against the risk of losing much more if the dollar starts that longer term downtrend. No Change.

EUR/USD FX live price, Weekly EURO vs US Dollar Price Risk Analysis Forecast

(Previous week in brackets)

EUR/USD LT-M MT-W ST-D
1.0830 (1.0942)
Trend ↓ (↓) ↓ (↓) ↓ (↓)
% Risk
Weight
28 (30) 18 (25) 4 (10)
Allocation 100% (100%)


Euro continued weakness all week and starts to look rather low risk versus high risk USD in all time frames. Even with the continued upward USD pressure we remain on full hedge for dollar receivables.

Last week: The US dollar is a little stronger again, and looking at technicals from experience, the risk of expecting a strong dollar is not good risk. All time frames are ‘dollar up’, yet the steep risk trend reversal in ST and MT and the mild risk trend reversal in LT Monthly are very suspicious indeed. We stay with our fully hedged dollar receivable advice. Same risk applies to MT or LT speculators as these pairs can pivot at a moments notice


Cable GBP/USD FX live price, Weekly Sterling vs USDollar Price Risk Analysis Forecast

(Previous week in brackets)

GBP/USD (Cable) LT-M MT-W ST-D
1.30.43 (1.2870)
Trend ↑ (↓) ↑ (↓) ↑ (↓)
% Risk
Weight
87 (74) 60 (40) 89 (12)
Allocation 100% (100%)


Cable was the odd one out showing good strength against the USD on the back of trade agreements and Boris Johnson losing his Treasurer and thus creating space for even more US style debt funding. So, as all risk weight trends are now up and even with MT Weekly looking to start showing bearish divergence in the next few weeks can but remain fully covered on dollar receivables. No Change.

Last week: Cable followed the general dollar trend up plus a bit more and lost nearly 2% last week. Horizontal support is coming in around 1.2750 and this level could signify a completion of the wave down that started at 1.3500 mid December. The same general analysis applies even though we believe GBP could be relative weaker in the major currency space. Even with all timeframes down, the overall technical picture calls for advice to stay with full long dollar receivcable cover in MT and LT. No Change


USD/JPY FX live price, Weekly USdollar vs Japanese Yen Price Risk Analysis Forecast

strong>(Previous week in brackets)

USD/JPY LT-M MT-W ST-D
109.85 (109.70)
Trend ↑ (↑) ↑ (↓) ↓ (↑)
% Risk
Weight
44 (47) 60 (60) 81 (71)
Allocation 70% (70%)


Dollar Yen is not providing strong indication this week. ST look to turn down whilst MT risk turned up at the same 60 level. The next fortnight must provide clarity on whether to go 100% cover on USD receivables or reduce. No Change for now.

Last week: Dollar Yen followed the general dollar trend with a full one percent rally last week. Whilst price entrered the 109 range again this was a level to increase dollar receivable risk to 70% which logically happened on the firtst hourly bearish divergence confirmation at 109.60 on Febr 5. For now this looks to be the most responsible MT to LT risk weight hedge, possibly seeking to increase further if the dollar peaks at higher level of drops through support at 107.60 or subsequently the 105.00 support reached twice between Dec 2018 and Aug 2019


GBP/EUR FX live price, Weekly Sterling vs EURO Price Risk Analysis Forecast

(Previous week in brackets)

GBP/EUR LT-M MT-W ST-D
1.2035 (1.1755)
Trend ↑ (↓) ↑ (↓) ↑ (↓)
% Risk
Weight
87 (82) 60 (54) 93 (40)
Allocation 100% (100%)


Sterling rallied on the back of strong demand into the 1.20 handle and a price range that is likely to show resistance. Risk weight trend is up but at high risk levels. We remain positioned in favor of Euro and a much weaker GBP over the next 6 months.

Last week: GBP’s relative expected weakness was confirmed with a 1% drop vs EURO. The 120-121 price window now seems stronger resistance and our advice to keep Sterling receivables or Euro payables fully covered remains the lowest risk play. No Change


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Posted in A - All Financial Blogs | 2020 Forecast, FX - USD Index, EUR, GBP, YEN | EYEFORGOLD.

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