DXY, USD/JPY, USD/CHF and USD/CAD Forecast – US Dollar in Focus on Monday

DXY Technical Analysis

The US dollar index is sitting right around the 97 level, and it has been coiling for several sessions in a row. If we can get a break to the upside, I then have three charts that I will be watching very closely for a US dollar recovery, some of which are already starting to show signs of that.

Keep in mind it is Presidents’ Day in the United States, so this could be a bit of a dud until Asia. Just take the information and extrapolate it into Asian and early European trading; it should be the same thing if we don’t get much action in North America.

USD/JPY Technical Analysis

The US dollar against the Japanese yen is a pair I am watching very closely because it is overdone to the downside. The Japanese situation is very untenable, and over the longer term, they will have to have lower rates.

The 200-day EMA sitting underneath is support right along with the 152-yen level. I think 154 yen remains a significant barrier that we need to break above to truly break free. I will be watching that level very closely to get involved in the carry trade yet again.

USD/CHF Technical Analysis

Another carry trade situation is the dollar against the Swiss franc. The Swiss National Bank is not too pleased about the Swiss franc’s strength and has vocalized that a couple of times. This is a market that looks to me like it is trying to find its bottom.

All we need is a little bit of momentum to the upside, and we could see a nice move towards 0.78 or maybe even 0.79. Anything above 0.79 would be a very bullish turn of events. The pair does pay you to hold it to the long side, as the interest rate differential is still pretty wide. As long as 0.76 can hold, you do have that opportunity.

USD/CAD Technical Analysis

The dollar against the Canadian dollar is starting to turn around. It looks like the 1.35 level might end up being a really hard floor in this pair. If we can continue to the upside, I think 1.37 is your next target, followed by the 200-day EMA at roughly 1.3850.

This is a pair that tends to be very range-bound and choppy over the longer term. You can see that we are in an area where you could make an argument for some type of consolidation: the 1.3850 level on the top and the 1.35 level on the bottom. This is not a pair that typically makes massive moves without some type of major external factor. Because of this, a bit of a bounce and a recovery make perfect sense. So far, it does look like it is trying to break above the exhaustion candle on Friday, which is a very bullish sign.