Dollar’s Slide Interrupted - SocGen
Kit Juckes, Research Analyst at Societe Generale, suggests that the
dollar’s slide was interrupted yesterday as angst about the global
economy overtook relative real yield trends as the dominant driver.
“Oil was down, the dollar bounced and high-beta and commodity-sensitive currencies corrected. Current FX trends are overwhelmingly the result of positions being taken off, rather than fresh ones being put on and that encourages slightly chaotic moves.
Stephanie Aymes and her Technical Analysis team warned yesterday that “The Dollar Index is now at the ‘make or break level’ of 92.50/92.10, the lower part of the broad 1- year consolidation zone which intersects the upward channel limits in force since 2008 and 2011 lows.
More importantly, 92.50/92.10 corresponds to the neckline of the Double Top pattern the Index has been tracing after it failed to overcome the stiff resistance of 100.40. Should the Index break durably below 92.50/92.10 (weekly close) it would imply a potential down move towards the projected potential which is located near 85 levels.” I’ve never made a secret of my inability to draw straight lines but we’ve either had a ‘fake break’ on an intra-week basis, that leaves the range, and the dollar’s uptrend intact, or we’re setting up for a bigger dollar fall if we end below these key levels at the end of the week.”