2018 has started very well for Bulls Globally. The equity market continues to make new highs but a very interesting move seems to be happening in the currency market.
The move: Weakness in Dollar
What's surprising that this is happening when US economy is surprising on the upside and the Federal Reserve is sticking to it's rate hike forecasts.
Here's Euro EURUSD daily chart:
It has been classic breakout chart. A breakout move above 1.16 in July 2017 and then pullback to 1.16 by Nov 2017 and now getting followed up by a powerful rally - bulk of which has come just in last 4-5 days. If we look at near-term - this is 15 min chart - Just see how steep the rally has been in Euro
POUND GBPUSD Chart is no different
There has been fresh breakout above 1.36.
The weakness in dollar is also playing up in Gold and Crude Chart. Brent Crude is now trading near $69.
INDIAN RUPEE: Here's how USDINR Chart looks like - Very Interesting Level
INR is now trading at its strongest level since June 2015. If the dollar weakness continues, then one cannot rule out the breakdown below 63.5 and it will become a really messy situation for policymakers.
USD Index is also not getting any technical support even when it's trading at its lowest level since early 2015
It's fascinating that everybody was talking about STRONG DOLLAR trade in early 2017 but the move has been completely contrary to popular thinking. It needs to be seen how long this weak dollar trend will last
THE LEVEL TO WATCH ON DOLLAR INDEX: 89
Remember it was the level of 89 that dollar index breached in Dec 2014 and started a new bull run in dollar index and hence on pullback near 89 - it is expected that dollar bulls will get their confidence back and a new bull run will resume in dollar.
STRONG DOLLAR KE ACCHEE DIN AANEY WAALEY HAIN 🙂
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers