US dollar to weaken again

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

US Dollar Index Price Risk Analysis Forecast 2021

(Previous week in brackets)

USD Index Monthly Weekly Daily
91.00 (90.53)
Trend ↑ (↓) ↑ (↑) ↓ (↑ )
% Risk
Weight
8 (7) 65 (55) 72 (45)
Allocation 70% (50%)

$Index chart

 


Analysis

5 February 2021: The US$ index represents a broader view on future dollar direction. The USDollar has been a little stronger since the start of the new year. As mentioned last week, Weekly risk weight may develop bearish divergence and that is what it looks like at the Feb 5 close. With Daily risk also advancing more rapidly and diverging from the Monthly indicators we will increase the dollar risk hedge back to 70% from 50%.

29 January 2021: The Yellen effect has been minimal with dollar clearly searching for a direction. The market is uncertain. Monthly risk on the dollar index appears low but has not finished. Quite possible that Weekly develops bearish divergence. No change to our preferred neutral 50% hedge.


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

(Previous week in brackets)

EUR/USD Monthly Weekly Daily
1.2037 (1.2120)
Trend ↓ (↓) ↓ (↓) ↑ (↓)
% Risk
Weight
73 (73) 69 (70) 17 (33)
Allocation 70% (50%)

EURO/Dollar chart

 


EUR/USD Analysis

5 February 2021: After an interim anticipated dollar correction upward, the technical picture now reads for a weaker dollar in the short and medium term again. We immediately move back to a 70% perpetual hedge on long dollar risk.

29 January 2021: At the January close, monthly risk weight turned down on limited dollar strength. Risk weight across time scales is not showing direction and if anything a mild strengthening of the dollar towards the 1.18 handle. The chart pattern does not show any exhaustian for an immediate bottom. We stay with our more neutral hedge recommendation of 50% since 2 weeks.


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

(Previous week in brackets)

GBP/USD (Cable) Monthly Weekly Daily
1.3720 (1.3675)
Trend ↑ (↑) ↓ (↓) ↑ (↓)
% Risk
Weight
95 (91) 77 (75) 45 (65)
Allocation 50% (30%)

GBP/USD chart

 


CABLE Analysis

5 February 2021: The general dollar outlook now also affects Cable and we are moving back to 50% hedge on long dollar transaction exposures. GBP was again relatively strong last week whilst cable dropped into midweek and turned up on Friday again. This is technically a stronger indication that the dollar may weaken further in the short term and also build medium term strength despite higher risk weight levels in long term time scales. GBP however still eyes weaker Medium term even though the market has pushed in the oppsite direction.

29 January 2021: Last week we lowered our short cable hedge to 30%. We don't like sterling although GBP has been successfully fighting technical signals for further weakness therewith largely neutralising clearly direction without much price change. We may be wrong in this general analysis for more Sterling weakness in the near future but will stay with this prediction until further signal develop. A near term stronger Cable peak can still develop or it may become part of a miuch weaker dollar. On Watch. No Change.


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

(Previous week in brackets)

GBP/EUR Monthly Weekly Daily
1.1385 (1.1274)
Trend ↑ (↑) ↑ (↑) ↑ (↑)
% Risk
Weight
78 (70) 82 (80) 73 (59)
Allocation 80% (80%)

GBP/EUR chart

 


GBP/EUR Analysis

5 February 2021: In spite of persistent but mild GBP strenght, Risk weight development still does not look favourable and the risk of a much weaker GBP is increasing as a result. We cannot see any fundamential reason either for Sterling strength, other than the emotional benefit of faster Covid vaccinations. In the end no country, and certainly the UK, can do it alone, except perhaps China for a while. We hold a perpetual 80% hedge on long GBP exposures. Long term objective calls for a break of the March 2020 low at 1.05 with a potential for 0.90.

29 January 2021: GBP continued it relative strength without much price change. The technical picture is still a corrective uptrend with risk weight time scales largely in neutral territory. Risk weight trends are all pointing up but very undecisive. No Change.

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

(Previous week in brackets)

USD/JPY Monthly Weekly Daily
104.55 (103.70)
Trend ↑ (↓) ↑ (↑) ↑ (↓)
% Risk
Weight
24 (25) 60 (35) 74 (55)
Allocation 50% (50%)

USD/YEN chart

 


Analysis

29 January 2021: Dollar/Yen ended the week relatively stronger on the back of apparent balancing of investment portfolios. Last week's rally is also an attempt to break a one year down trend. The technical picture between different time scales could trigger more medium Yen weakness against all major currencies. We maintain advice to hold a neutral and very manageable 50% cover on currency trading risk.

22 January 2021: Dollar Yen is unchanged for the week and looks to see a bit more pressure as trading starts on Monday morning. 102.50 still looks a hard fence to break. The best technically driven risk position is to maintain 50% cover until the market decides otherwise. We are now hovering around current levels for 3 months without clear direction. No Change.

15 January 2021: Dollar Yen has hardly moved an inch during the dollar advance last week and confirms our long term view that is is likely to largely move with the dollar, although the dollar/Yen downtrend again appears hesitant to want to continue on that downtrend. Technicals are looking for a minor correction north towards 105.00 perhaps. No Change.8 January 2021: As we have been expecting throughout 2020, the Japanese Yen continued to follow the dollar on its slightly weaker path versus the other major currencies, Euro, CHF, GBP. The 1% strengthening dollar/yen into 8 January to 104.00 from 102.60 is consistent with the general short term dollar direction last week. A 103.50-105.00 range is likely before we may see some very short term hourly divergence. Any move is likely to be fairly limited. No Change.


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Posted in A - All Financial Blogs | 2021 Forecast, FX - USD Index, EUR, GBP, YEN | EYEFORGOLD.

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