The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
) -- The dollar index continues to hold in short mode, with weak trend and sentiment readings that seem to make another test of 77.00 support inevitable.
The dollar was unable to make gains against major rivals when global stocks moved into their four-day slide last week, revealing that the global banking system is as yet unwilling to commit to either side of the dollar in strong numbers. That may be the norm as long as there are global civil unrest and uncertain outlooks regarding central banks' quantitative easing programs.
The 20-day simple moving average at 78.00 is now upside resistance that will be very difficult to break. That said, tests of support have been initially bought on an intraday basis, with moves lower on the dollar index being heavily reversed in the subsequent trading period.
The Swiss franc and Japanese yen have dominated the dollar over the last five trading sessions, and if their weighting within the dollar index was more than the current 15%, traders would have seen a collapse in dollar index futures valuations.
The euro, the pound and the Canadian and Australian dollars have all managed to find buyers against the greenback, albeit in somewhat erratic trading periods.
Next week will see red-flag economic releases, so now would not be the time to commit too much to either side of any individual currency pair. Signals will be forthcoming as the trading week gets started, with tests of trend, momentum and price action likely to be seen as the week unfolds.
Intraday Currency SMI
The SMI detail shown below forms part of TheLFB subscription service that analyzes global trading.
- Dollar Index (Short)
Short momentum, short trend. Long from 77.55 targeting 77.75. Short from 76.95 targeting 76.75
- Euro/Dollar (Mixed)
Long momentum, flat trend. Long from 1.3775 targeting 1.3820. Short from 1.3700 targeting 1.3660
- Pound/Dollar (Short)
Short momentum, short trend. Long from 1.6190 targeting 1.6230. Short from 1.6060 targeting 1.6030
- Dollar/Yen (Short)
Short momentum, short trend. Long from 81.95 targeting 82.20. Short from 81.50 targeting 81.25
Marco Hague is one of the founders and principals of The London Forex Broadsheet (commonly known as TheLFB), a global forex trader portal with headquarters in the U.S. Hague began his career with the Bank of England dealing with foreign exchange control, and he has been trading for the last three decades. He has been involved with institutional risk asset ratio analysis and the implementation and maintenance of institutional trade desks globally.