A week with some volatility lies behind us. The Dollar-Index printed a nice green weekly candle and has finally broken the old highs from sep2020. From a technical perspective the close above the 95 mark opens the way for more strength into next week. Nevertheless we cannot rule out a false break with a lower probability. Hence, if the Dollar stays above the 95 level the Index may rise to around 98 in the upcoming weeks. This corresponds to an increase of 3 percent.
EURUSD -- 1.1445 (weekly close)
With a weight of 57.6% the currency pair has a huge impact on the Dollar-Index. Therefore the technical implications are quite similar. With the break of the 1.15 mark and the 200 wma left behind the next big level lies around the 1.1174/68 support zone. This equals a further potential loss of 2.37% on the assumption EURUSD will not reclaim 1.15 again. If you had bought 6 mth tenor volatility (see Morning Call #14) on wednesday before CPI numbers you would have logged in a small profit already. 6m Vol went up from 5.69 to 5.97 end of week. There is more to come.
GBPUSD -- 1.3416 (weekly close)
The chart picture looks less clear to me. The slope of the downward channel is not very convincing yet and could just be a countertrend of the larger uptrend. The low of the week at 1.3353 just hit the support line of the channel and bounced back instead of a further acceleration to the downside. Therefore I would be carefully watching the resistance zone around 1.3607 (high of the week) and 1.3645 (50 weekly ema) with shorts. A better play might be longs above the lower trendline of the channel.
USDCHF -- 0.9213 (weekly close)
The currency pair rose 1.17% last week and reclaimed the 50 ema and the mid Bollinger band. Big support came in from the green trendline and soaring risk markets which typically do not help safe-haven currencies like the Swiss Franc. Nevertheless the pair is in the process of consolidation between the green support line and red resistance line. As current spot rate is nearly exactly in the middle of the triangle I advise to keep stops very tight and look for a break either side to rethink the situation.
USDJPY -- 113.90 (weekly close)
On the weekly chart the currency pair looks quite stretched to me. Since the january low this year the pair is up around 11%. Although the Dollar made a new yearly high the pair did not even touched the highs of the weeks before. The weekly candle is green anyway and we have to respect that. Therefore it might be 75 to 100 pips to early to short the pair. But as long as USDJPY does not make it above the green marked resistance zone I prefer to short the pair.
Have a nice weekend!
Sebbo