I expect the US dollar to stage a rebound from current trade. The same support levels that held in mid-June I expect to hold around 80.70 in September futures. The first confirmation that an interim bottom has been established would be a settlement above the 20-day MA (light blue line). This would likely be followed shortly thereafter by a trade back to the 38.2% Fib level and 50-day MA that both come in just above 82.25. While I am not calling for a bull market I do see a 2-3% appreciation in the coming weeks.
Portable Strategy
Though I will not take a long trade with clients in the dollar, I will use this analyses aiding with entries and exits in other commodities that appear to be influenced by the dollar movement.
Markets that could be influenced by a 2%-3% Dollar appreciation:
- Gold, silver and energies move lower.
- Cocoa moves lower.
- Currencies move lower. I like bearish trade in the Pound, Euro and Swissie.
- We get a bounce in the Treasury complex.