USDollar search for short term direction | 29 Jan 2021

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
90.53 (90.21)
Trend ↓ (↓) ↑ (↑) ↑ (↓)
% Risk
Weight
7 (8) 55 (20) 45 (65)
Allocation 50% (50%)

$Index chart

 


Analysis

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.

22 January 2021: It looks like the market is taking the approach that Yellen wants the dollar at a more competitive level. Our contrarian technical view is we we 'wait and see'. Daily is on bearish divergence which should take the dollar a little lower this coming week. There is pressure from very short term hourly as well. If there is going to be a big future move 'it will be big' and we take action accordingly. Monthly risk is low, Weekly turned up and Daily needs to meet the Weekly again to determine the next major move. For now, No change.


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

(Previous week in brackets)

EUR/USD Monthly Weekly Daily
1.2120 (1.2170)
Trend ↓ (↑) ↓ (↓) ↓ (↓)
% Risk
Weight
73 (90) 70 (75) 33 (28)
Allocation 50% (50%)

EURO/Dollar chart

 


EUR/USD Analysis

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.

22 January 2021: Looking at the different risk weighst time scales Euro is likely to move higher and it makes sense to enter a full hedge short term contra risk position until Daily risk meets Weekly. If there will be a Yellen effect it will likely be a long term trend. History tells us such a trend could overshoot. For now we stay with the current formal 50% dollar hedge and wait for Daily risk to meet Weekly and see if that is going to be the direction for the next few years. With monthly at overbought levels we need to check how that pens out in the next few weeks or months. This is a low risk strategy approach in a very fragile world economy.


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

(Previous week in brackets)

GBP/USD (Cable) Monthly Weekly Daily
1.3675 (1.3672)
Trend ↑ (↑) ↓ (↓) ↓ (↑)
% Risk
Weight
91 (91) 75 (86) 65 (76)
Allocation 30% (30%)

GBP/USD chart

 


CABLE Analysis

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.

22 January 2021: Cable looks more vulnerable short term and medium term in all technical tools which makes GBP looking potentially weaker than other major currencies. The market still appears to adopt a strong future for Sterling. Our tools tell a different story, although GBP may eventually turn stronger than USD if the latter sets in a late cyclical downtrend. No Change for now.

15 January 2021: We are changing our hedge recommendation on Cable to 30% max hedge on perptetual dollar transaction receivables, from 50%. This technically appears a low risk change from the 50% position we have adopted for much of 2020. Even though GBP has been relatively strong against other majors this past week, it doesn't look very appealing in our analysis.


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

(Previous week in brackets)

GBP/EUR Monthly Weekly Daily
1.1274 (1.1236)
Trend ↑ (↑) ↑ (↑) ↑ (↓)
% Risk
Weight
70 (42) 80 (82) 59 (80)
Allocation 80% (80%)

GBP/EUR chart

 


GBP/EUR Analysis

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.

22 January 2021: No Change from last week. GBP looks weak in a one year phase of consolidation around 1.10. We stronly hold on to the outlook of a sub par GBP to Euro fully supported by technical risk analysis. 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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