Daily Spotlight: Currencies

A weekly summary of one complex, including daily updates of other developments elsewhere.

[pay]Dollar Basket Dec (DXZ) Last Tuesday’s confirmation of Monday’s break allowed room and time for a bounce to refuel sellers. A gap above 81.50-81.65 signaled the bounce underway. The delay has been more of a consolidation than a bounce. It even included an overnight probe of fresh lows.

Absent overnight data, the pattern may be forming a Complex Descending Triangle (red outline). A break lower would target 80.92, and potentially 80.28, being vulnerable to reversing up sharply from either.

Regardless, last week’s overnight low at 81.07 should attract price down for at least a retest. A break higher first would be possible, but unlikely after consolidating a two-day trend for nearly a week.

30-year Treasury Dec (USZ) Monday’s inside day gapped up into last Wednesday’s range, then filled the gap back to Friday’s close. No trending ahead of Tuesday’s FOMC announcement.

Crude Oil Nov (CLX) [$1.31 premium to Oct] Monday’s rally probed Wednesday’s range from below by mid-morning. The balance of the session ranged sideways. Probing a fresh high above 76.85 Tuesday and reversing to close under 76.50 would end the corrective bounce.

Natural Gas Oct (NGV) Thursday morning’s drop back to prior lows was retraced entirely Monday, this time to a fresh low. Thursday’s drop had recovered too quickly, but not this time. An immediate recovery would not be credible.

Gold Dec (GCZ) Three consecutive higher closes, and three consecutive higher intraday highs, each have closed under the prior session’s prior high. Buyers aren’t gaining traction. Monday’s “ineffectual optimism” reflected the same.

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Weekly Spotlight coverage’s schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).