USDollar pressure still building | 21 May 2021

US$ Index

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

(Previous update in brackets)

USD Index Monthly Weekly Daily
89.65 (90.23)
Trend ↓ (↓) ↓ (↓) ↓ (↓)
% Risk
Weight
17 (17) 15 (35) 12 (40)
Allocation 70% (70%)

$Index chart

 


Analysis

21 May 2021: The Greenback remains under pressure and whilst all times scales are showing lower risk weight, this typically is early build up for a string of bearish divergence indications along the way until a long term time scale bottoms. In today's fragile world economy of things, it is a harder prediction to make. It seems the pressure is on and here to stay. The 88.25 Q4 2017 low needs to be broken on a month end close basis for confirmation.

7 May 2021: Pressure on the USD started last Wednesday and had strong follow through on Thursday and Friday. As the interim long term Monthly risk weight trend turned back down, this price development suggests a much larger move is looming and we would expect a break of the 2018 low at 88.25 fairly soon whilst no oversold risk weight condition is apparent. For non monopolistic medium and larger international operations the 70% dollar hedge is a responsible position. 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
1.2175 (1.2157)
Trend ↑ (↑) ↑ (↑) ↑ (↑)
% Risk
Weight
78 (77) 83 (65) 84 (55)
Allocation 70% (70%)

EURO/Dollar chart

 


EUR/USD Analysis

21 May 2021: The Euro also shows some sign of exhaustion at these levels with relatively high risk weight readings. Confirmation of a major and consistent dollar downtrend will be confirmed of this pair breaks 1.2550 on a month end close. The dollar receivable hedge remains at 70%.

07 May 2021: Euro/USDollar of course is the largest contributor to the USD index and 100% confirms the picture sketched above. We expect this pair to break the Febr 2018 high of 1.2550 before long. As we already broke the long term downtrend line back in November 2020, there is technically nothing to stop the Eur/dollar from reaching the 2008 1.6000 high again in a few years time. 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
1.4137 (1.3950)
Trend ↑ (↓) ↑ (↑) ↓ (↑)
% Risk
Weight
88 (85) 75 (44) 82 (62)
Allocation 70% (70%)

GBP/USD chart

 


CABLE Analysis

21 May 2021: Cable was also stronger again waiting to break the February high at 1.4240. GBP/USD remains a long term hedge at 70% in favor of GBP.

7 May 2021: The Cable picture is broadly showing the same although Monthly risk at a slightly higher nominal risk weight level. Sterlinh has generally remained stronger than we expected for some time although our longer term anaylsis is not changing. GBP/USD however should be on its way to first break the Febr high at 1.4240 with a next stop in a wider 1.60 pivot range. No Change


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

(Previous week in brackets)

GBP/EUR Monthly Weekly Daily
1.1601 (1.1485)
Trend ↑ (↑) ↑ (↓) ↓ (↓)
% Risk
Weight
73 (72) 45 (45) 60 (45)
Allocation 80% (80%)

GBP/EUR chart

 


GBP/EUR Analysis

21 May 2021: Weekly risk weight has been at this 45% level for three weeks, first turning down last week and now up again. This indicates uncertainty about direction whilst our technicals favor a weaker pound. True economic fundamentals such as a UK ltd balance sheet are completely ignored and GBP keeps trading up on the back of independance and a faster Covid vaccination procedure. We are still in the upper quartile of a 5 year 10% trading range between roughly 1.2000 and 1.0800. We still favor a decisive break of the March 2020 low at 1.0511. No Change to limiting the downside risk of Sterling with a perpetual 80% hedge on new forward GBP receivables vs Euro.

7 May 2021: Since 2016 GBP/EUR has been trading in a 1.10 - 1.20 range with a brief exit to 1.05 in 2019. Brexit then took the reigns which has favored GBP rightly or wrongly. Speculative pressures have kept GBP in a fairly strong position. Still today GBP is more likely to return to its 50 year long term downtrend against Euro (Read Deutschmark and Guilder). The fact that several equally weak (inflationary) former European currencies are now part of the equation should not hold GBP back from slowly dropping towards and eventually below par in the next few years. 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
108.75 (108.43)
Trend ↑ (↑) ↓ (↓) ↓ (↓)
% Risk
Weight
72 (70) 67 (66) 35 (70)
Allocation 70% (70%)

USD/YEN chart

 


Analysis

21 May 2021: $/Yen has largely gone asleep wheras the Yen is again moving more in line with dollar direction. $/Yen is now trading against a longer term resistance channel. There are no clear indications except that Long term and medium term risk weight looks hesitant to move much higher and thus stay with the same dollar receivable hedge against yen expecting a return to a 100.00 price level.

7 May 2021: The present technical picture shows weight on the dollar although the long term picture also shows potential weakness for Yen. Once $/Yen approaches 100 again we may need to review the level of cover in favor of Yen. No Change for now.


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

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