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Currency update – $ looks overcooked here

There were a few extensions that we reported in various $ currency pairs in the April 30th edition. We remarked then that we remained bullish of the $ and that a pause in the uptrend might be all that we expected to see. There was indeed some churning followed by renewed strength - probably best seen in this $ index chart:

$ index daily & wkly summ

So the $ index has reached a level where we would expect it to experience some difficulty in going higher, at least for now. There are some supporting pieces of evidence from related markets. The $/Swiss Franc has been quiet of late as both currencies have been strong. Most recently the Swiss has been the slightly stronger of the two, as shown in this first chart, while the £ and the Euro have continued to drop:

$-swiss, £-$, €-$ dailies

This slight extra strength in the Swiss has been sufficient that the two weaker currencies (£ and €) have now fallen enough against it to produce bottom extensions:

£-Swiss & €-Swiss exts

This makes buying the Euro and the £ quite low-risk hereabouts and the best way to do so is probably by buying them against the $ despite the fact that these two signals are in their Swiss Franc pairs.

If long dollars, take profits.

All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com