Currency Exchange Rates

The US Dollar is trending lower, as the Fed’s policy to keep interest rates low for the foreseeable future is continuing to wreck havoc on the dollar. The dollar may be worse if it were not for the monetary easing going on throughout the world. We seem to be the “tallest midget” in the FX markets. The US dollar broke the 50-day moving average and its downtrend line, and seems poised to test the 200-day MA at the 78 level.

If it wasn’t for Germany and its economic resilience, the Euro might not be worth more than the Greek Drachma of old. The currency has bounced off its uptrend line and broke through the 50-day MA to the upside, and seems to be forming a wedge pattern. Both the uptrend line and the downtrend line are converging to form a wedge, and when they do, the currency will break out violently in one direction, whether it be up or down.

The British Pound is enjoying a revival of sorts, as the index held support at the 200-day MA and broke out to the upside. The 50-day MA also crossed up through the 200-day MA, which is interpreted by many as a sign that the market is turning long-term bullish. This is known as a “Golden Cross”.

The Japanese Yen broke through resistance at the 50-day MA after seemingly hitting a bottom at the 119 level. The 127 level looks like the next target for the Yen, despite the government’s monetary policy.

The Brazilian Real has so far held support at the its short-term uptrend line. Stay tuned in.

The Australian Dollar held support at the 200-day and bounced back to the 50-day MA. With the Australian dollar being tied to commodities, and thus tied to the US Dollar, look for the index to break the 50-day MA to the upside, as the US Dollar seems poised to fall some more. A falling US dollar means higher commodity prices (most of the time), which means a stronger Aussie Dollar (all else equal).