This chart of the currencies that make up the $USD has been shown before. I have not reset the trendlines since publishing the chart in April. But look what is happening relative to the trendlines.
You can see the Yen lost support at 100 where it had rallied from multiple times in April. That level has been lost. We'll see if it regains its momentum.
The British Pound continues to gap above and below the 154 level. Today its back below. This chart will be interesting to watch at the green trendline. Will it get support or fall through it? You can also see on the far left the market bounced off the 153 level so this is an important support point on the chart. It is also testing the bottom of the uptrend since March.
The Canadian Dollar rallied up to parity (100) and is now turning down again. Comparing this with the Aussie chart lower will be important for commodity clues. Will it follow the Aussie lower or will it get support at the green trendline? There are a lot of interesting points on this chart. Currently it is making higher highs and higher lows.
The blue trendline on the Aussie ended up being particularly important. It fell below and backtested back up to it. It made a sideways trading range marked by the green lines. It avalanched yesterday through the 9 month support level and gapped lower today..
The Swissie also rallied off the March low and tried to turn up. Today it has resumed its test of the large head/shoulder pattern. This green line looks to be in jeopardy and is an important currency to watch. The Swiss 10 year bond is extremely low in yield compared to the US so money seems destined to flow towards the USD.
The Euro appears to be a couple of weeks behind the Swiss as it is still up near the highs of the right shoulder. Today it moved below the support of late April. Will it continue to move towards the neckline? The rapid action has taken 2 cents off the Euro in the last 2 days.
The Swedish Krona completed the Head/shoulders pattern in April but continued to fight back and forth across the 152 level. The move down today has fallen below again. The gap was also resistance in the rallies.
Lets look at the wider view again. Stunningly interesting places on the long term charts.
These currency moves continue to be big as they move across major technical levels. Currencies affect bond flows, commodity prices and equity prices as we have seen in Japan.
Good trading,
Greg Schnell, CMT.
