FX Rate Analytics

Written by Research / Trade Team | 19 October 2009

Of the US dollar Index

Viewing the USDX at this opening week of October 19, 2009 some expected recovery is being shown at the weakness of the USD/JPY rates as an indicator of unwillingness of the USD/JPY to decline to the levels of 87.11 which was registered in April of 2008 with the USDX at 71.40 from a low of 70.81 - 90 low in March 2008.

The US Dollar may continue to rebound as an empty European economic calendar leaves currency markets looking to risk sentiment as the catalyst for price action. A handful of negative earnings reports in Asian hours added to last Friday’s disappointing US outcomes, which stands to boost demand for the safety-correlated currency.

EURUSD breaks below the rising support trend line on 4-hour chart, suggesting lengthier consolidation of uptrend from 1.4484 is underway. Range trading between 1.4780 and 1.4966 is expected to follow, and a short term cycle bottom is expected to be formed above 1.4780 support. However, below 1.4780 will signal deeper decline to 1.4600 area. Key resistance is now at 1.4966, a break above this level will indicate that the uptrend from 1.4484 has resumed, then another rise towards 1.5100 could be seen. Although some corrective moves are expected the all time high of 1.6037 registered in the month of July 2009 is the ultimate objective if and when the 87.11 for the USD/JPY will be attained.

USD/JPY is currently working at the price level of 90.66 as of this writing. some US dollar recovery can be seen as the more important support of 89.68 / 70 range can be tested as the lowest price registered in April of 2008 at the price level of 87.11 may still be assaulted if and when this support price will be broken.

As the GBP/USD still lags behind the trend momentum of the Euro on strength. Although, the initial target of 1.6380 has been attained when the volumes and volatility to move forward remains to be bias then 1.6550 would be easily tested. As the all time high for the GBP/USD of 2.1160 was also achieved on Nov of 2007when the USDX low price levels were at 74.11bp.

In essence, the relationship of the US dollar is dictating the price alignment of the other foreign currencies but as of now there needs to have some price re-alignment or adjustments as the disparity of the exchange rates should try to have an equilibrium level that may favor trade relationships with the major trade partners of the United States. Therefore, some corrective moves for the USDX may prevail in the near term upwards looking for the much awaited correction as the comparative rate analysis may signal the contrary trend at current levels.

While the USD/CHF was at the price level of 0.9611 when the all time low for the USDX was also at 70.81 simultaneously when the US dollar recovered. The important psychological price of .9930 should really be loked at as this may soon be assaulted as the USDX continue to head lower. Although, a day to day basis could be seen as part of the technical recovery for the US dollar for the time being.