Brief Thoughts about the Dollar's Price Action

I had thought that the US could correct lower after the disappointing jobs data, given the large speculative long position evident in the futures market.  Wrong.  

The euro has broken down and is at three week lows.  It appears a double top may be in place in the $1.1035-50 area.  The neck line was near $1.0715-20, which is just above the Fibonacci retracement near $1.0680.  Technically there is nothing stopping a test on the multi-year lows set in the middle of last month near $1.0460.  The RSI has turned down this week and the MACDs are about to cross.   The euro near its session lows, unable to sustain even the most mild of upticks. 

Sterling has broken down further after being pushed away from the $1.50 area that was approached yesterday.  It has fallen nearly three cents from yesterday's high and is set for a multi-year low close.    Politics is trumping economics, though BOE Carney's dovish twist on March 12 did not help sentiment. The $1.4635 area marked the low on March 18, but it is hard to call that support.  The $1.45 area is the next important target. 

The dollar is set to finish the North American session above its 20-day moving average against the yen for the second time in three sessions.   US 10-year bond yields are 5 bp higher after the poor auction, but the dollar went bid before the bonds sold off.  The impulse is also not coming from stocks were are little changed.  The  MACDs and RSI has turned higher.  The JPY121.00-20 offers the next chart resistance. 

The antipodean currencies are faring the best against the greenback. The Aussie is flat.  It has made higher highs for three consecutive sessions, but has not been able to sustain the upside momentum.  If the $0.7740-50 area marks resistance, support is seen in the $0.7640-60 area.  The New Zealand dollar is about 0.2% low, and for the fourth time in five session appears to be rejected the $0.7600 area.  A break of $0.7480 would likely signal the end of the nearly 5 cent upside correction.   

The US dollar posted a big outside up day against the Canadian dollar yesterday, and follow through buying has pushed the greenback into the CAD1.26 area, which houses the 20-day moving average.  Tomorrow Canada reports the March employment data.  The recent string of poor data and central bank suggests to us that Canada may be one soft employment report away from cutting interest rates next week.  The CAD1.2635 area is a retracement objective from this month's decline.