Is The US Dollar Making A Top?

After the Bank of England Gov. Mervyn King signaling concern regardless the value of the currency, the British Pound rallied against the U.S. Dollar and closed above $1.51. “We’re certainly not looking to push sterling down,” King told ITV News in an interview Thursday night, saying the pound was probably near a “properly valued” exchange rate.

The U.S. Dollar remained weak on the face of data showing that overall consumer prices rose more than previous estimates as the core measure of inflation was right on target. U.S. consumer prices jumped 0.7% in February, led by a surge in gasoline prices.

Economists had forecast a 0.6% increase. The core measure, which strips out food and inflation, rose 0.2%, in line with expectations.

The dollar index - DXY -0.54% - which measures the greenback against six rivals, traded at 82.277 compared with 82.605 in late North American trading on Thursday. The WSJ dollar index (XX:BUXX) -0.55% , which measures the greenback against a wider currency basket, fell to 73.26, down from Thursday’s close at 73.56.

The euro - EUR/USD +0.0105% - traded at $1.3093 versus Thursday’s level of $1.3003. As the Eurozone finance ministers get together this weekend to discuss Cyprus long-stalled bailout. There is very little optimism that Italian politicians would be able to put together a long term durable government.

Against the Japanese yen - USD/JPY +0.0076% - the dollar slipped to ¥95.96 from ¥96.10 the previous day. On Friday, Haruhiko Kuroda – seen as dovish on monetary policy – was confirmed as the new governor of the Bank of Japan after the upper house of Japan’s parliament approved his appointment.

Let’s take a look at the currencyshares Trust ETF’s and see how we can identify some trading opportunities for next week.

FXB Currency Shares B Pound Trust ETF
The FXB Trust ETF closed at 1.4918. The market closing below the 50 MA (1.5386) is confirmation that the trend momentum is bearish. With the market closing above the VC Weekly Price Momentum Indicator of 1.4859, it confirms that the price momentum is bullish. Look to take some profits, if long, as we reach the 1.5034 and 1.5149 levels during the week. Buy corrections at the 1.4743 to 1.4569 levels to cover shorts and go long on a weekly reversal stop. If long, use the 1.4569 level as a SCO/GTC (Stop Close Only and Good Till Cancelled order).


FXE Currency Shares Euro Trust
The FXE euro Trust ETF contract closed at 1.2954. The market closing below the 50 MA (1.3153) is confirmation that the trend momentum is bearish. With the market closing above the VC Weekly Price Momentum Indicator of 1.2917, it confirms that the price momentum is bullish. Look to take some profits, if long, as we reach the 1.3015 and 1.3076 levels during the week. Buy corrections at the 1.2856 to 1.2758 levels to cover shorts and go long on a weekly reversal stop. If long, use the 1.2758 level as a SCO/GTC (Stop Close Only and Good Till Cancelled order).


FXY Currency Shares Japanese Yen Trust
The FXY Japanese Yen Trust ETF contract closed at 1.0275. The market closing below the 50 MA (1.1724) is confirmation that the trend momentum is bearish. With the market closing above the VC Weekly Price Momentum Indicator of 1.0246, it confirms that the price momentum is bullish. Look to take some profits, if long, as we reach the 1.0336 and 1.0396 levels during the week. Buy corrections at the 1.019 to 1.01 levels to cover shorts and go long on a weekly reversal stop. If long, use the 1.01 level as a SCO/GTC (Stop Close Only and Good Till Cancelled order).

Disclosure: Trading Derivatives, Financial Instruments And Precious Metals Involves Significant Risk Of Loss And Is Not Suitable For Everyone. Past Performance Is Not Necessarily Indicative Of Future Results.