USD Index

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

(Previous update in brackets)

USD Index Monthly Weekly Daily
92.08 (92.60)
Trend ↑ (↑) ↓ (↑) ↓ (↓)
% Risk
Weight
22 (25) 77 (88) 22 (75)
Allocation 70% (70%)

$Index chart

 


Analysis

12 April 2021: USdollar is clearly trying to find direction but the uptrend was halted dropping over 1.5% from the peak last week. No Change to overweight hedge on dollar receivables.

5 April 2021: Last week Goldman Sachs bank issued a change of heart turning 180 degrees on the direction of the USDollar against a basket of major world currencies. They may well know something we don't, but looking at our basic technical tools risk weight certainly has not yet produced the kind of signal to change our mind. The dollar index peaked in December 2016 at 1.0365, made an interim bottom in 2018 at 0.8825 and peaked again in March 2020 at 1.0300. The Index subsequently travelled south to 0.8920 without reaching a low risk extreme or bullish divergence in ANY of the short, medium and long term time scales. That is the simple fact driving a contrarian view. It is too easy to connect a dollar direction to rising interest rates. Interest rates go up because there are too many dollars expected to being borrowed. Institutions and Sovereigns are selling some long term treasuries. Real interest rates (Nominal market Rates minus Real Inflation) are NEGATIVE and that makes a dollar rise suspicious. Hence no change to maintaining the 70% overweight perpetual hedge of dollar receivables.


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

(Previous week in brackets)

EUR/USD Monthly Weekly Daily
1.1910 (1.1798)
Trend ↓ (↓) ↑ (↓) ↑ (↑)
% Risk
Weight
76 (75) 20 (10) 80 (22)
Allocation 70% (70%)

EURO/Dollar chart

 


EUR/USD Analysis

12 April 2021: Euro strength has lifted Daily risk weight rapidly from 20 to 80% and is creating space for a brief divergence correction. Euro/US$ is also seeking direction and hefty investment trading has short term impact on the exchange rate too. In the old days, the 70's, the bank would call the Central bank with orders of 100M or more. These days it is billions which can be absorbed by most major banks' treasuries. These numbers often have no reference whatsoever to any type of international trade. There is no clear long term direction because the US$ failed to push harder on the downside in recent months. For now no change but we may have to review the hedge weight in the near future. Biggest reason to stay with dollar weakness is bullish divergence between Weekly (low risk up) Euro/USD and Monthly (high risk down). The latter doesn't appear finished as we would expect it to spike before reaching a more serious cycle top.

5 April 2021: The Euro/USD chart looks very similar to the Dollar Index chart with technical analysis falling in line as a result. The correction of the Euro vs dollar looks to be just that; 'a correction' without having witnessed any kind of traditional or strategic bear signal. No Change.


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

(Previous week in brackets)

GBP/USD (Cable) Monthly Weekly Daily
1.3740 (1.3895)
Trend ↓ (↓) ↓ (↓) ↓ (↑)
% Risk
Weight
85 (88) 42 (55) 23 (47)
Allocation 70% (70%)

GBP/USD chart

 


CABLE Analysis

12 April 2021: Cable looks a bit stronger following a larger drop pushing GBP a bit further down against all other majors. Divergence between short medium and long risk should keep GBP/USD from pushing down further. No Change.

5 April 2021: GBP continued the stronger of the majors including US Dollar and the overall technical picture remains in favor of GBP vs USDollar. Monthly risk did turn down at high but not extreme levels without bearish divergence signal. Weekly in neutral risk range also down since the 1.42 handle peak in Febr. Daily risk is strongly poiting upward being drawn into its longer time scales. GBP has remained relatively stronger than expected but we feel confortable to maintain an overweight perpetual hedge on dollar receivables and vice versa.


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

(Previous week in brackets)

GBP/EUR Monthly Weekly Daily
1.1535 (1.1775)
Trend ↑ (↑) ↓ (↑) ↓ (↓)
% Risk
Weight
70 (72) 76 (93) 8 (85)
Allocation 80% (80%)

GBP/EUR chart

 


GBP/EUR Analysis

12 April 2021: GBP/EUR has been stronger than we expected and last week took a relative beating. The fundamentals for GBP don't look good as the economy suffers tremendously. The currency however doesn't seem to care much until last week. We should expect a corection in the opposite direction again, but we generally remain with our long term forecast of a sub par GBP vs Euro. No Change.

5 April 2021: Even though this market has continued to advance against our long time forecast, the picture is beginning to change somewhat, in that we clearly see signals of topping action in Short and medium term time scales. Hedging is NOT speculation. It is managing relatively unacceptable risk. Depending on cost of goods sold within a given period with exchange rate movements that risk can only be manageable if the 4 percent overshoot of currency can be absorbed. That is where we are and the the current higher level will certainly doesn't give any signal to change our current view. On the contrary, so no change. Long term outlook remains sub par.

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

(Previous week in brackets)

USD/JPY Monthly Weekly Daily
109.40 (110.08)
Trend ↑ (↑) ↓ (↑) ↓ (↓ )
% Risk
Weight
60 (62) 87 (93) 42 (82)
Allocation 70% (70%)

USD/YEN chart

 


Analysis

12 April 2021: Last week we increased dollar receivable hedge to 70% perpetual.
That technically also seems the lower risk type of approach with USD > 110.00. Some bulliswh divergence is possibly developing between Daily and Weekly risk weight but isn't that clear as Daily is in a downtrend in the 40-45% risk range. No Change.

5 April 2021: Dollar Yen at current level and based on high risk Short and Medium term time scales is falling in line with the general dollar picture. We are looking to increase the Yen payable and Dollar receivable hedge to 70% from 50%, but wait for the Monthly risk weight to close in and signal a potential reversal. The primary Dollar downtrend started in 2015 at 125.00, lost 25% and bounced off 100.00 in 2016 to reach 115.00 to then drop again into the 102.00 handle in Q4 2020. The most recent move could still travel to 112.00/113.00 but medium term is already very overbought. Agressive treasuries should now follow daily and increase immediately. Longer term operators could wait for a Medium term bearish divergence confirmation before doing so. This could be several weeks away.

26 March 2021: The risk trend is up in all time scales. This would typically develop further yen weakness. With weekly risk weight already above 90% the long term picture is mixed since Monthly only made a single regular bottom at 25% risk. We need to watch in coming weeks and the best approach is to maintain a 50% perpetual hedge either side of the transaction exposure.


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

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