The USD today has extended its appreciation run against a number of world currencies, bringing it closer to tests on several.
Against the Yen, USD has pushed through the March swing high and filled a gap created in September 2003. Its interesting to note that the strong run of the USD against JPY started as the Bank of Japan signaled that it would end its campaign to weaken the Yen against the Dollar.
Price remains within easy range of the March swing high so we'll want to keep an eye out for a possible failed test here.
The Euro is poised to retest the April swing low:
The Pound is likewise poised to retest the April swing low. GBPUSD having broken the neckline of a head and shoulders pattern, will likely accelerate its downward move (GBPUSD down = strengthening USD) if this test does not hold - a potential target using the measured move from the head and shoulders pattern is illustrated.
USDCAD is trending upwards (USDCAD up = strengthening USD) after leaving the neckline of an inverse head and shoulders pattern.
Finally, the US$ Index is testing a the April swing high.
With several world currencies at or near tests of prior swing lows, we can expect that news this week will play an important role in determining where the USD heads in relation to other world currencies.
As we can see on the weekly US$ Index chart, the greenback has had a multi-year decline in value - in the big picture its too early to call the US$ a new bull market. It is however setting up a pattern of higher highs and higher lows on the weekly chart, so until an important test fails and reverses this trend, we can simply acknowledge that the trend is up for now.
That up trend is going to have a continuing predictable dampening effect on many commodities, including Gold, which we'll talk about later today. /Mike
04.05.10 08:01 #