The Pound fell this evening to its lowest level since the 1980s.
Stronger dollar drives Euro & Aussie lower
The Euro continues to test support at $1.3350 against the greenback after a false break above the February high of $1.37. Breach of support would warn of a bull trap, and follow-through below $1.31 and the rising trendline would signal a reversal. 13-Week Twiggs Momentum, however, continues to indicate a primary up-trend; a trough above zero would strengthen the signal. Recovery above $1.37 is less likely, but would signal a fresh advance.
* Target calculation: 1.38 + ( 1.38 – 1.34 ) = 1.42
Sterling is testing resistance at €1.20. Recovery of 13-week Twiggs Momentum above zero suggests an up-trend. Breakout above €1.20 would signal an advance to €1.23*. Respect of resistance is unlikely, but would suggest another test of €1.1650.
* Target calculation: 1.20 + ( 1.20 – 1.17 ) = 1.23
The Greenback is headed for another test of resistance at ¥101. The bullish ascending triangle suggests an upward breakout with a target of ¥108. Breakout above ¥101 would confirm. 13-Week Twiggs Momentum descended steeply over the length of the consolidation, but completion of a trough above zero (recovery above say 5%) would indicate a primary up-trend. Reversal below support at ¥96 is now unlikely.
* Target calculation: 1.01 + ( 1.01 – 0.94 ) = 1.08
Recovery of Canada’s Loonie above $0.96 would complete a second higher trough against its US neighbor. Breakout above $0.9750 would signal a primary up-trend, but breach of primary support at $0.9450 is as likely and would signal continuation of the primary down-trend. Another 13-week Twiggs Momentum peak below zero would also indicate a down-trend.
The Aussie Dollar is testing medium-term support at $0.93*. Respect of the zero line by 63-day Twiggs Momentum suggests continuation of the down-trend. Breach of support at $0.93 would confirm, signaling a test of primary support at $0.89. Recovery above $0.9450 is less likely, but would a rally to $0.9750. The RBA needs a weaker Aussie Dollar, without lowering interest rates, and will do all it can to assist the decline.
* Target calculation: 0.975 + ( 0.975 – 0.95 ) = 1.00
The Aussie continues to test support at $1.12 against its Kiwi neighbor. Rising Momentum suggests another rally to $1.16, confirmed if resistance at $1.14 is broken. But breakout below $1.12 would signal a decline to $1.08*. Breakout above $1.16 would complete a triple-bottom reversal with a target of $1.20*.
* Target calculations: 1.12 – ( 1.16 – 1.12 ) = 1.08 OR 1.16 + ( 1.16 – 1.12 ) = 1.20
Forex: Euro breakout, Aussie strengthens
The Euro broke through its February high of $1.37, signaling a long-term advance to $1.46*. Troughs above zero on 13-week Twiggs Momentum indicate a healthy up-trend, but expect retracement to test the new support level. Reversal below support at $1.34 is unlikely, but would warn of another correction.
* Target calculation: 1.37 + ( 1.37 – 1.28 ) = 1.46
Sterling is testing medium-term support at €1.175. Penetration of the rising trendline warns the trend is weakening and failure of support would signal a correction to primary support at €1.14. Reversal of 13-week Twiggs Momentum below zero strengthens the warning. Recovery above resistance at €1.20 is unlikely, but would signal an advance to €1.225*.
* Target calculation: 1.20 + ( 1.20 – 1.175 ) = 1.225
The greenback is pretty directionless against the Japanese Yen, reflecting indecision. Declining 13-week Twiggs Momentum warns of trend weakness. Breakout above ¥101 would signal another advance, while breach of support at ¥96 would indicate a reversal.
Canada’s Loonie is back at parity against the Aussie Dollar. Expect some support at this level. A breach of the descending trendline would alert us to a potential rally, as would reversal of 13-week Twiggs Momentum above zero.
The Aussie Dollar encountered resistance at its target of $0.97* against the greenback. Short retracement would indicate strong momentum, while respect of the new support level at $0.95 would suggest a healthy up-trend. Failure of support is unlikely, but would warn the up-trend is weakening.
* Target calculation: 0.95 + ( 0.95 – 0.93 ) = 0.97
The Aussie Dollar is strengthening against its Kiwi neighbour, breaking resistance at $1.14 to signal another test of $1.16. Bullish divergence on 13-week Twiggs Momentum favors a primary up-trend. Breakout above $1.16 would complete a double-bottom reversal with a target of $1.20*. Reversal below $1.14 is now unlikely, but would warn of another decline; confirmed if primary support at $1.12 is broken.
* Target calculations: 1.16 + ( 1.16 – 1.12 ) = 1.20
Forex: Dollar falls sharply against Euro, Aussie, Loonie and Yen
The dollar fell sharply against the Euro and Sterling. The Euro jumped from primary support at $1.28 to medium-term resistance at $1.32. Breakout above $1.32 would suggest a primary advance, with a target of $1.40* — confirmed if resistance at $1.34 is broken. But oscillation of 63-day Twiggs Momentum around zero does not indicate a strong trend and respect of resistance is just as likely.
* Target calculation: 1.34 + ( 1.34 – 1.28 ) = 1.40
Pound Sterling is weakening against the euro, breach of medium-term support at €1.16 suggesting a test of primary support at €1.1350 on the weekly chart. A 13-week Twiggs Momentum peak below zero would indicate a strong primary down-trend. Breach of primary support would offer a target of the 2011 low at €1.10.
The greenback retreated below support at ¥100 against the Yen. Recovery above ¥100 would indicate continuation of the advance, with a target of ¥114*. Respect of the new resistance level, however, remains as likely and would warn of a test primary support at ¥94.
* Target calculation: 104 + ( 104 – 94 ) = 114
Canada’s Loonie broke resistance at $0.96, suggesting a rally to the descending trendline and resistance at $0.9850 against the greenback. Reversal below $0.96, however, would warn that all bets are off and another test of support at $0.9450 is likely. 63-Day Twiggs Momentum oscillating below zero indicates a healthy primary down-trend.
The Aussie Dollar penetrated its secondary descending trendline, suggesting a rally to test the primary trendline at $0.96. But first we need a break of resistance at $0.93, while follow-through above $0.94 would strengthen the signal. Respect of resistance, however, would warn of another test of immediate support at $0.90, while the long-term target remains at $0.80* against the greenback. The RBA is not averse to this: they need a softer dollar to cushion the impact of falling commodity prices.
* Target calculation: 0.95 – ( 1.10 – 0.95 ) = 0.80
Forex update
The euro is likely to re-test primary support at $1.32 against the greenback. Declining 63-day Twiggs Momentum, below zero, warns of continuation of the primary down-trend. Breach of support would indicate a primary decline to $1.22*.
* Target calculation: 1.32 – ( 1.42 – 1.32 ) = 1.22
Sterling rallied off primary support at $1.53/$1.54 against the greenback but 63-day Twiggs Momentum again warns of a primary down-trend. Failure of support would offer a target of $1.46*.
* Target calculation: 1.53 – ( 1.60 – 1.53 ) = 1.46
Canada’s Loonie is headed for another test of resistance at $1.01 against the greenback. Declining 63-day Twiggs Momentum, however, continues to warn of a primary down-trend. Respect of resistance is likely, and would signal another test of primary support at $0.95. Declining commodity prices also favor a down-trend.
* Target calculation: 0.95 – ( 1.01 – 0.95 ) = 0.89
The Aussie Dollar appears stronger than the Loonie, which is unusual. Both are affected by commodity prices, but the Aussie tends to be more volatile than its Canadian counterpart. Obviously, higher interest rates in the Southern hemisphere are an attraction. Again, 63-day Twiggs Momentum warns of a primary down-trend. And reversal below parity would warn of another test of primary support at $0.95.
* Target calculation: 0.95 – ( 1.07 – 0.95 ) = 0.83
The greenback has strengthened sharply against the South African Rand and Brazilian Real. Both volatile, resource-rich currencies are likely to re-test their recent highs: the rand at R8.50 and the real at 1.90 against the dollar.
The greenback shows strong bullish divergence against Japan’s yen on 63-day Twiggs Momentum, warning of a reversal. Breach of the long-term descending trendline would strengthen the signal. Breakout above ¥80 would confirm.
Euro drags sterling lower
The euro broke support at $1.36 and is headed for a test of primary support at $1.32. Respect of zero by 63-day Twiggs Momentum signals a strong down-trend. Failure of support would signal a decline to $1.22*.
* Target calculation: 1.32 – ( 1.42 – 1.32 ) = 1.22
The pound is also retracing, to test primary support at $1.53. 63-Day Twiggs Momentum indicates a strong down-trend. Failure of support would signal a decline to $1.45*.
* Target calculation: 1.53 – ( 1.61 – 1.53 ) = 1.45
Euro sinks, dragging sterling lower
EURUSD broke through $1.36 warning of another test of primary support at $1.32. Respect of the zero line by 63-day Twiggs Momentum confirms a primary down-trend. Failure of support would offer a target of $1.22*.
* Target calculation: 1.32 – ( 1.42 – 1.32 ) = 1.22
GBPUSD is being dragged lower by the euro. Reversal below $1.60 warns of another test of primary support at $1.53 — as does 63-day Twiggs Momentum respect of the zero line. Failure of support would offer a target of $1.46*.
* Target calculation: 1.53 – ( 1.60 – 1.53 ) = 1.46
Forex: Euro and the Aussie dollar strengthen
The euro is testing resistance at the former support level of $1.40, in the hope that the bailout out-lined today will rescue the euro-zone from its debt crisis. We will probably read fairly disparate views over the next few weeks before the varying viewpoints synthesize into a clear market direction. Reversal below $1.365 would warn of a decline to $.20*, while narrow consolidation below the resistance level would suggest a breakout and advance to the 2011 highs.
* Target calculation: 1.30 – ( 1.40 – 1.30 ) = 1.20
The Pound similarly rallied to $1.60. Respect would re-test primary support at $1.53, while breakout would target $1.67.
* Target calculation: 1.53 – ( 1.60 – 1.53 ) = 1.46
The dollar broke support at ¥76, continuing its long-term (mega) down-trend against the Yen. Target for the breakout is ¥72*.
* Target calculation: 76 – ( 80 – 76 ) = 72
The Aussie benefited from the weaker greenback, recovering above $1.04 to signal an attempt at $1.08*. Penetration of the descending trendline indicates that the down-trend is weakening.
* Target calculation: 1.04 + ( 1.04 – 1.00 ) = 1.08
The Aussie and Loonie both closely follow commodity prices. Respect of the upper trend channel on the CRB Index would warn of another down-swing.
Canda’s Loonie is testing resistance at $1.00 against the greenback. Reversal below $0.975 would warn of another down-swing, while breakout above parity would target $1.02*.
* Target calculation: 1.00 + ( 1.00 – 0.98 ) = 1.02
The Aussie dollar completed a double bottom against its Kiwi counterpart (probably due to lost man-hours after celebrating their Rugby World Cup win). Expect a test of $1.32* followed by retracement to confirm support at $1.28.
* Target calculation: 1.28 + ( 1.28 – 1.24 ) = 1.32
The South Africans went home early (from the RWC) and a descending triangle on the USDZAR warns of downward breakout to test support at $7.20.
* Target calculation: 7.80 – ( 8.40 – 7.80 ) = 7.20