The dollar is trying to regain strength but markets are headed for selling the dollar and the euro maintains a level above 1.24

The Dollar rose boosted by a fall in the Euro. Month, quarter and year-end (Japan) factors forced traders to buy back their short Dollar positions.

The dollar is trying to regain strength but markets are headed for selling the dollar and the euro maintains a level above 1.24

Dollar is trying to regain strength strong euro

The Dollar rose boosted by a fall in the Euro. Month, quarter and year-end (Japan) factors forced traders to buy back their short Dollar positions. The rout in technology stocks extended, sinking Wall Street, boosting Treasuries and pushing down yields. Risk sentiment remained fragile. The VIX (Volatility Index) spiked 6.7 %

Outlook:

“What goes up must come down”.. I say it again…and this refers to the Euro, not stocks. How long will it take traders to realize this? Euro area data once again missed forecasts with a weaker read on German Import Prices and the Euro Zone Economic Sentiment Indicator. Finland’s Central Bank Governor Erki Liikanen said that market participants expecting an end to the ECB’s stimulus program in September could be mistaken. The Euro fell 0.50% to 1.2400, boosting the Dollar.

Trading View:

The Dollar closed bid in spite of the market’s fragile risk sentiment and drop in the US Ten year bond yield. The Wall Street slump came late in the North American trading day. European markets were closed. The move was not felt in their stocks and bonds. As we draw near to the holiday weekend of the month, quarter and year-end or some, position adjustments will dominate trading.

The Dollar Index (USD/DXY) – rebounded on the Euro fall to end up 0.34% at 89.38 (89.04 yesterday). The Dollar Index traded to an overnight high of 89.633. Immediate resistance lies at 89.60. Immediate support can be found at 89.30 and then 89.00. The overnight low traded was 88.942. Expect more sideways trading between 89.20-89.70 today. Buy dips.

 

EUR/USD – Any hawkish comments from an ECB official is met with an equally dovish comment from another. Last night Liikanen countered Wiedemann. Perhaps we may have another candidate for the top ECB position. And once against Euro area data under-performed. Last and not least market positioning remains heavily skewed in favour of Euro long bets. EUR/USD closed at 1.2400 and has immediate support at 1.2370/80 (overnight low was 1.23725). Immediate resistance can be found at 1.2430 and then 1.2460. Likely range today 1.2370-1.2430. Look to sell rallies.

EUR/USD

USD/JPY – finished little-change, closing at 105.40 (105.47 yesterday). The USD/JPY jumped to an overnight high of 105.90 before the fall in tech stocks took it lower. This morning, the Dollar hit 105.30, currently settling at 105.40. Let’s not forget that the Japanese financial year end is in March and there will be some hefty adjustments possibly today (spot settlement is March 30, Friday… not a Japanese or US public holiday). USD/JPY has immediate support at 105.20 and 105.00. Immediate resistance lies at 105.60/80. Likely range today 105-106. Look to buy dips.

USD/JPY

AUD/USD – worst performer amongst the G10 currencies, falling just over 1% to close at 0.7678 (0.7748 yesterday). The Aussie has that heavy feel to it and the current market positioning is long. Net positioning switched from tiny short to +AUD 20,000 long. AUD/USD has immediate support at 0.7670 and then 0.7650. A clean break of 0.7650 could see us back down to 0.7550. Immediate support can be found at 0.7700 and 0.7720. The Aussie is also weak on the crosses dropping to an eight-month low against the Kiwi (1.0570). Likely range today 0.7650-0.7700. Look to trade the range shag.

AUD/USD

NZD/USD – slip-sliding away. The Kiwi closed down 0.52% at 00.7260 from 0.7300 yesterday. The broad-based US Dollar strength weighed on the New Zealand Dollar. The AUD/NZD is also at 8-month lows and any fall in the Aussie will drag the Kiwi along with it. NZD/USD has immediate support at 0.7245 (overnight low was 0.7258). Immediate resistance can be found at 0.7280 and then 0.7300. Look to sell any rallies in the Flightless Bird with today’s likely range 0.7240-0.7280.

NZD/USD

USD/ZAR –  The rand is set to benefit as fears of a trade war between the US and China abate, according to market analysts. “Easing trade fears have sparked new-found risk appetite, supporting emerging market currencies and the rand in particular, following Moody's decision to retain SA’s investment grade credit rating,” Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions, said in a morning update. At 09:49 on Tuesday the rand was trading at R11.63 to the dollar, after opening at the same level. 

USD/ZAR

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***Information contained in this newsletter are gathered from third parties and should not be regarded in any way as trade advice or recommendations by CM Trading. CM Trading does not recommend or advise traders or investors in their decision making but merely provides information from the market for its clients as additional information is made available as per the events occurring in the financial markets.

 

HIGH RISK WARNING:

Trading Foreign Exchange (Forex) and Contracts for Differences (CFD’s) is highly speculative, carries a high level of risk and may not be suitable for all investors. You may sustain a loss of some or all of your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin.

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