I wrote from last week that I expected the dollar weakness to carry into this week. The rate of change should not be surprising but always feels like its faster than expected. Though currently We are seeing decreased volume in early trading. We are getting price squeezes on the 60 min charts with the correlated majors (CAD, CHF, EUR, GBP). The daily charts on the EUR and GBP and CHF are all screaming overbought vs. the dollar. I wonder if this price pop will lead to further weakness or we will finally get the results we are seeking.
Weekly Charts:
Arguably the CAD has been range bound with a narrowing range since mid may to the end of sept.
The weekly on the GBP and EUR show room for the upside as well
I feel the CHF weekly is more ripe for shorting whereas the GBP and EUR have more room to move further up. This would be a good position to leverage given the weekly technicals.
The JPY is showing that mid 82 as a very feasible support level but beyond those levels scaling in longs would be optimal into the Q4.
TAKE AWAY:
I think our dollar strength call may have been a bit premature given the nature of the longer term charts. Considering this is more of a sentiment/fundamental driven market at the moment, using the longer charts may have been more fruitful. I think it would be optimal to increase the hedges going into next week.
-Alexander T. Lê
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