In financial futures, dealers are considered the ‘smart money’. They tend to be bearish at the top and bullish at the bottom. So, it usually pays to pay attention when their position becomes extreme. Well, the dealer short position in Euro is basically off of the bottom of the screen. In fact, the dealer short position in early 2018 (last big EURUSD high) pales in comparison to the current position. Price wise, pay attention to the levels noted yesterday.
Is DXY still ‘trying’ to bottom? If so, then it needs to turn up around 92, which is the line off of the 2011 and 2014 lows (arithmetic scale). 91.50-92.00 has also been a major pivot since 1998. I sound like the boy who cried wolf but I’m on alert for a turn higher.
The Australian dollar climbed to its highest levels against the greenback since December of 2018 in early trading on Friday. The Aussie has been lifted by recent positive Sino-U.S. trade developments and better than expected economic data.
Gold is sitting on top of the 2011 high…major level. A break below would open up 1765/90 (see hourly chart below), which is a well-defined zone and intersects the lower parallel of the Schiff fork from the high. Proposed resistance is 1941 (high volume level from today). As noted yesterday, I’ve been tracking near term fluctuations in GLD. High today was just above 185, which keeps the short term bearish channel intact (see yesterday’s GLD chart).
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Since the 8/6 high in gold, I’ve been closely tracking GLD. The rally from 8/12 found resistance at the 61.8% retrace and a short term bearish channel is confirmed following the median line touch. If GLD has turned lower, then resistance should be 185.00 (38.2% retrace and VWAP from the high).
These 3 charts are from Nordea’s latest FX Weekly. The relationships between the Fed’s balance sheet / USD, Trump’s job approval / USD, and EURUSD / US-Europe Covid case count spread all point to a stronger USD from current levels.
3 lower highs and 2 lower lows since the EURUSD high. I like that strength has failed near VWAP from the high twice and that today’s high is near the high volume level (circled) from 8/19. 1.1880 is still resistance if reached and the big test for the bulls remains the lower parallel, currently near 1.1675 (see below).
Gold started the week on the defensive after being unable to hold above the key $2,000 level late last week. Meanwhile, the US dollar has stabilized, finding its feet after falling to its lowest levels in over two years last Tuesday.