The correction in the US Dollar remains intact - BBH

According to Marc Chandler, Global Head of Currency Strategy at BBH, the correction in the US Dollar remains intact unless proven otherwise. Marc provides additional technical views on FX majors below.

Key Quotes

A move now above the 102.60 area in the Dollar Index would be a preliminary signal of another run to 103.80 and higher., while in terms of downside targets, these can be found near 100.80 and then 100.00.

The five and 20-day moving averages crossed in the euro as well.  Provided the $1.0480-$1.0500 area remains intact, the upside correction appears to remain intact.  On the upside the $1.0600-$1.0620 blocks a test on the year-end high a little above $1.0650 and the post-Fed high near $1.0670.  

The dollar's near-term peak against the yen was set on December 15 near JPY118.65.  It fell to almost JPY115.00 before recovering after the US employment data.  Ironically the moving averages also crossed down for the dollar for the first time since right after the US election.  Provided the dollar stays below the JPY116.80-JPY117.25 band, the downside correction remains intact.  If JPY115  breaks, the next target is found in the JPY114.25-JPY114.50 area.  

Despite a series of robust economic reports, sterling continues to trade heavily.  The five and 20-day moving averages have not crossed.  Although a double bottom appears to be in place near $1.22, and neckline near $1.2400 was surpassed, it was not sustained.  A break of $1.2280 is an early signal of another push lower.   A push below $1.2200 could open the door to $1.2000-$1.2050.  

Since December 23, the Canadian dollar has been the strongest of the majors.  It has gained 2.4% against the US dollar.  Strong trade and jobs data before the weekend helped extend the Canadian dollar rally.  However, the momentum eased as the greenback approached the trend line drawn off the August, September, and December lows.  It is was found near CAD1.3150 before the weekend and is near CAD1.3170 at the end of next week.   The technical indicators warn that it may be a bit early to pick a bottom to the US dollar.  Some are looking for a test on the 200-day moving average near CAD1.3100.  A move above CAD1.3280 could be an early sign that a low may be in place.  

The Australian dollar carved out a bottom near $0.7160 over the last couple of weeks and bounced a little through $0.7350.  The close before the weekend was poor, near session lows.  A break below $0.7250 would be a preliminary sign that the upside correction is over.  The technical indicators are constructive, though the five and 20-day moving averages have yet to cross higher.