The Euro reversed direction in response to the weakening dollar, breaking resistance at $1.28 to indicate another test of $1.31/$1.32. Respect of the new support level would confirm.
The Aussie Dollar likewise displays evidence of buying pressure, with long tails below resistance at $1.04. Breakout would offer a target of $1.06*. Reversal of of 63-day Twiggs Momentum below zero, however, would warn of a primary down-trend.
* Target calculation: 1.04 + ( 1.04 – 1.02 ) = 1.06
The Euro respected resistance at $1.28 and another test of medium-term support at $1.265 is likely. Breach of support would indicate a correction to $1.23.
The Aussie Dollar likewise respected resistance, at $1.04. Follow-through below $1.03 would test primary support at $1.02/$1.015. Recovery above $1.04 is unlikely but would test $1.06*. Reversal of of 63-day Twiggs Momentum below zero would suggest a primary down-trend.
* Target calculation: 1.04 + ( 1.04 – 1.02 ) = 1.06
The Euro is testing support at $1.28. Breakout would respect the primary down-trend, warning of another test of primary support at the 2010 low at $1.19/1.20. Reversal of 63-day Twiggs Momentum below zero would strengthen the signal. Recovery above $1.32 is less likely but would indicate an advance to $1.35/$1.36*.
Pound Sterling rallied off support at €1.225 against the Euro. Breakout above €1.26 would indicate an advance to €1.29. A 63-day Twiggs Momentum trough above zero — and respect of the rising trendline — would both indicate a healthy up-trend. Breach of support at €1.225, however, would signal a primary down-trend.
* Target calculation: 1.26 + ( 1.26 – 1.23 ) = 1.29
Canada’s Loonie is testing support at parity against the greenback. Respect would indicate an advance to $1.06*. Breach of resistance at $1.03 would strengthen the signal and a 63-day Twiggs Momentum trough above zero would confirm. Failure of support, however, would warn of another test of primary support at $0.96.
* Target calculation: 1.03 + ( 1.03 – 1.00 ) = 1.06
The Aussie Dollar broke resistance at $1.04 after the RBA announced that it would not cut interest rates, leaving them on hold until December. Expect an advance to $1.06*. 63-Day Twiggs Momentum oscillating above zero suggests a primary up-trend.
* Target calculation: 1.04 + ( 1.04 – 1.02 ) = 1.06
The Aussie Dollar (daily chart) is headed for another test of resistance at $1.04 against the greenback. A 63-day Twiggs Momentum trough above zero suggests a primary up-trend. Breakout above $1.04 would offer a target of $1.06*.
* Target calculation: 1.04 + ( 1.04 – 1.02 ) = 1.06
The Euro (weekly chart) is testing resistance at $1.32. Recovery of 63-day Twiggs Momentum above zero suggests a primary up-trend. Breakout above $1.32 — and penetration of the descending trendline — would confirm, offering an immediate target of the 2012 high at $1.35.
* Target calculation: 1.32 + ( 1.32 – 1.28 ) = 1.36
Pound Sterling (weekly) rallied off primary support at €1.225/€1.23 against the euro. Breach would complete a head and shoulders reversal with a target of $1.18*. Reversal of 63-day Twiggs Momentum below zero suggests a primary down-trend. Expect a test of resistance at $1.26 followed by another attempt at primary support.
* Target calculation: 1.23 – ( 1.28 – 1.23 ) = 1.18
Canada’s Loonie (daily) is consolidating between $1.00 and $1.01 (USD). Downward breakout — and penetration of the rising trendline — would warn of another test of primary support at $0.96. But 63-day Twiggs Momentum is bullish and a trough above zero would suggest an advance to the 2011 highs at $1.06.
The Euro rallied off support at $1.28 and is headed for resistance at $1.32. Recovery of 63-day Twiggs Momentum above zero suggests a primary up-trend. Breakout above $1.32 would confirm, offering an immediate target of the 2012 high at $1.35.
* Target calculation: 1.32 + ( 1.32 – 1.28 ) = 1.36
Pound Sterling is testing primary support at €1.23 against the euro. Breach would signal a primary down-trend. Target for the completed head and shoulders reversal would be $1.18*. Reversal of 63-day Twiggs Momentum below zero would strengthen the signal.
* Target calculation: 1.23 – ( 1.28 – 1.23 ) = 1.18
Canada’s Loonie found strong support between $1.01 and $1.02 (USD). Breakout would indicate an advance to the 2011 highs at $1.06. Rising 63-day Twiggs Momentum strengthens the signal.
The Aussie Dollar found support at $1.02/$1.015 against the greenback. Expect another test of $1.06. 63-Day Twiggs Momentum troughs above zero indicate a primary up-trend. Breakout above $1.06 would offer a target of the 2011 high at $1.10*, though there is bound to be some resistance at $1.08.
* Target calculation: 1.06 + ( 1.06 – 1.02 ) = 1.10
The Euro is headed for another re-test of resistance at $1.32 and its descending trendline. Breakout would signal a primary up-trend. Recovery of 63-day Twiggs Momentum above zero strengthens the signal. Reversal below $1.26 is unlikely but would warn of another test of primary support at $1.20.
* Target calculation: 1.275 + ( 1.275 – 1.20 ) = 1.35
Pound Sterling is testing support at €1.23 against the Euro. Breach of support — and the rising trendline — would warn the primary up-trend is ending. Retreat of 63-day Twiggs Momentum below zero would strengthen the signal.
Canada’s Loonie is testing support against the greenback at $1.02/$1.01. Respect of support — with recovery above $1.027 — would confirm the primary up-trend. A 63-day Twiggs Momentum trough above zero would strengthen the signal. Target for the advance is the 2011 high of $1.06.
* Target calculation: 1.04 +( 1.04 – 1.01 ) = 1.07
The Aussie Dollar found support at $1.02/$1.015 on the daily chart. Follow-through above $1.03 would suggest another test of $1.06. Failure of support is unlikely but would signal a primary down-trend. 63-Day Twiggs Momentum troughs above zero indicate continuation of the primary up-trend. Expect strong resistance at $1.06: the Aussie may be range-bound for some time.
The Euro is testing resistance at $1.32 and its descending trendline. Upward breakout would warn the primary down-trend is ending. Recovery of 63-day Twiggs Momentum above zero indicates a primary up-trend. Breakout above the 2012 high of $1.35* would strengthen the signal, but only a higher trough of several weeks would confirm.
* Target calculation: 1.275 + ( 1.275 – 1.20 ) = 1.35
Pound Sterling is correcting to support around €1.22 against the Euro. Breach of the rising trendline would warn the primary up-trend is ending, while retreat of 63-day Twiggs Momentum below zero would suggest a primary down-trend.
Canada’s Loonie is testing the new support level against the greenback at $1.02. Respect of support would confirm the primary up-trend indicated by long-term bullish divergence on 63-day Twiggs Momentum. Target for the advance is $1.08* but expect resistance at the 2011 highs of $1.06.
* Target calculation: 1.02 +( 1.02 – 0.96 ) = 1.08
The Aussie Dollar respected resistance at $1.06 against the greenback, retreating to test support at $1.04 on the daily chart. Respect of support is likely and follow-through above $1.05 would indicate another test of $1.06. The 63-day Twiggs Momentum trough above zero signals a primary up-trend. Breakout above $1.06 would confirm. Expect resistance at $1.075/$1.08, but target for an advance is $1.10*.
* Target calculation: 1.06 + ( 1.06 – 1.02 ) = 1.10
The Aussie Dollar is testing resistance at ¥83.50 against the Japanese Yen. Recovery of 63-Day Twiggs Momentum above zero indicates a primary up-trend. Breakout would signal an advance to ¥88*. Reversal below ¥79.50 is unlikely but would re-test primary support at ¥74.
* Target calculation: 84 + ( 84 – 80 ) = 88
A few readers objected to my view that the RBA should intervene to prevent further appreciation of the Australian Dollar. One reason cited is that the RBA is not strong enough to stand up to global capital markets and would eventually be forced to capitulate. I disagree. If you are printing your own money you can take on all-comers. The SNB demonstrated this by preventing depreciation of the euro against the Swiss Franc, pegging the rate at 1.20 CHF for the last year.
The second argument was that “the market knows best” and any interference would cause more problems than it solves. My answer to that is that capital markets are subject to huge ebbs and flows, some determined by trade fluctuations but primarily caused by speculative flows and deliberate strategies by other central banks. If the RBA fails to act, local industry exposed to international competition may be irreparably damaged by loss of international markets and being under-cut in local markets by cheap imports. When the tide eventually turns, and the dollar weakens, it would be difficult to restore those industries if key capital equipment and skilled jobs have been lost.
The US is a perfect example: China and Japan hold more than $2 trillion in US treasury investments which helped to suppress appreciation of their currencies against the greenback, maintaining a trade advantage which cost the US millions of manufacturing jobs. It will be difficult to restore those industries lost even if the imbalance is corrected.
The Euro broke out above its trend channel and resistance at $1.2750 on the daily chart to signal a primary up-trend. Recovery of 63-day Twiggs Momentum above zero confirms. Target for the advance is the 2012 high of $1.35*.
* Target calculation: 1.275 + ( 1.275 – 1.20 ) = 1.35
Pound Sterling is correcting to support around €1.22 against the Euro. Breach of the rising trendline would warn that a top is forming, while retreat of 63-day Twiggs Momentum below zero would indicate a primary down-trend.
Canada’s Loonie is retracing to test the new support level after breaking above resistance against the greenback at $1.02. Breakout confirms the primary up-trend indicated by long-term bullish divergence on 63-day Twiggs Momentum. Target for the advance is $1.08*.
* Target calculation: 1.02 +( 1.02 – 0.96 ) = 1.08
The Aussie Dollar is testing resistance at $1.06 against the greenback. The 63-day Twiggs Momentum trough above zero signals a primary up-trend. Breakout above $1.06 would confirm. Expect resistance at $1.075/$1.08, but target for an advance would be $1.10*.
* Target calculation: 1.06 + ( 1.06 – 1.02 ) = 1.10
I commented a few days ago that apart from a bad case of Dutch Disease — where capital inflows and increased revenues from resources projects drive up the exchange rate and harm other export industries — the Australian dollar is at risk of developing “Swiss Disease” — where flight to a safe haven currency also drives up the exchange rate, destroying local export industries. Professor Warwick McKibbin has a point:
“When a portfolio shift into Australian currency is observed, the exchange rate change should be completely offset so the shock only affects the money markets rather than the real economy. If the shock cannot be observed precisely then the central bank should “lean against the wind”, that is intervene to slow down the extent of appreciation of the exchange rate.”
The RBA should be selling dollars to protect local export industries from rapid appreciation of the currency.
The Aussie Dollar is headed for resistance at ¥83.50 against the Japanese Yen. Recovery of 63-Day Twiggs Momentum above zero indicates a primary up-trend. Breakout would signal an advance to ¥88*.
* Target calculation: 84 + ( 84 – 80 ) = 88
The Euro is headed for $1.275, unaffected so far by the announcement that the ECB will purchase government bonds in the secondary market. Expect strong resistance at $1.275, reversal below the lower trend channel would warn of a correction.
Pound Sterling is weakening against the euro, with a descending triangle testing support at €1.255. Failure of support would indicate a test of €1.230. 63-Day Twiggs Momentum is falling, but continues to indicate a primary up-trend.
* Target calculation: 1.255 – ( 1.285 – 1.255 ) = 1.225
Canada’s Loonie is testing resistance against the greenback at $1.02. Breakout would indicate an advance to the 2011 highs at $1.06. Reversal below parity is unlikely, but would test primary support at $0.95/$0.96. Rising 63-day Twiggs Momentum suggests a primary up-trend.
The Aussie Dollar found support at $1.02 against the greenback. Expect a test of $1.04. Breakout would indicate $1.06, while respect would warn of a down-swing to parity. Recovery of 63-day Twiggs Momentum above zero suggests an up-trend.
The Australian Dollar found support against the yen at ¥79.50/¥80.00. Recovery above ¥83.50 would indicate a test of ¥88.00. Rising 63-day Twiggs Momentum suggests a primary up-trend. Reversal below ¥79.50 is unlikely, but would indicate another test of primary support at ¥74.
A monthly chart shows the euro testing long-term support at $1.20 against the greenback. Recovery above the steeply descending trendline would indicate another test of the upper triangle border, while failure of support would indicate long-term re-alignment. Indications, from president Mario Draghi, that the ECB will further expand its balance sheet explains euro weakness, but similar moves by the Fed would restore the status quo.
On the daily chart, the Euro is headed for resistance at $1.275. The primary trend remains downward, but breach of the descending trendline indicates it is losing momentum. Failure of support at $1.240 and penetration of the rising trendline, however, would indicate another test of primary support at $1.205.
Pound Sterling formed a descending triangle, testing support at €1.255 against the Euro. Failure of support would indicate a test of €1.225. 63-Day Twiggs Momentum is falling, but continues to indicate a primary up-trend.
* Target calculation: 1.255 – ( 1.285 – 1.255 ) = 1.225
Canada’s Loonie is consolidating in a narrow band below resistance against the greenback at $1.02. Breakout above resistance at $1.02 would indicate an advance to $1.06, while reversal below parity would test $0.95/$0.96.
The Aussie Dollar is retracing to find support against the greenback, with $1.02 a likely target. Respect would suggest another test of $1.08. Narrow oscillation of 63-day Twiggs Momentum around zero would suggest a ranging market.
Australian Dollar appreciation against the yen is slowing. Reversal below ¥79.50 would indicate another test of primary support at ¥74.
