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U.S. Dollar (USD) Is On Our Radar!

Currencies / US Dollar Apr 07, 2022 - 04:15 PM GMT

By: Chris_Vermeulen

Currencies

Since the USD plays such a strong role in global economics, we thought it appropriate to see how the USD performance is vs. other currencies and investments.

For the U.S. consumer, a strong USD means U.S. goods are more expensive in foreign markets. For U.S. companies that buy or sell products/services globally, a strong USD means they are less competitive. A strong dollar is a significant headwind that erodes the profits of U.S. multinationals.

Since we trade and invest in ETFs, it is especially interesting to see how the USD has been trading in 2022 compared to Gold (GLD), the S&P 500 (SPY), and the Nasdaq 100 (QQQ). Gold is the top performer, followed by the Australian dollar (AUD) and the U.S. dollar (DXY). We can also see on the following chart the recent recovery rally in both the SPY and QQQ. Amazingly the QQQ has recovered half of its 2022 loss in just the last few weeks.


DXY – US DOLLAR CURRENCY INDEX – DAILY COMPARISON CHART

   www.TheTechnicalTraders.com – TradingView

U.S. DOLLAR VS MAJOR CURRENCIES PERFORMANCE MIXED

The following chart from www.finviz.com shows us that the USD has strengthened vs. the Japanese yen, Eurodollar, British pound, and Switzerland franc. But also that the USD has weakened vs. the Australian dollar, New Zealand dollar, and the Canadian dollar.

The AUD, NZD, and CAD reflect the impact of rising energy and commodity prices. The JPY reflects Japan’s negative interest rate as well as its dovish economic policy. While the EUR, GBP, and CHF are suffering from capital outflows due to the impact of Europe’s Russia Ukraine war.

US DOLLAR YEAR TO DATE RELATIVE PERFORMANCE VS MAJORS

www.finviz.com

US DOLLAR APPRECIATED +11.19%

Since May 25, 2021, the USD has been steadily appreciating as a stand-alone market. We can also see that the USD has been in a bullish upward-sloping channel. The USD has offered many buying opportunities at both its bottom trendline as well as its Fibonacci support levels. It continues to make higher highs and higher lows.

The USD remains attractive as it is the primary reserve currency for government central banks. The FED, with its recent rate hike, has signaled that it is planning on additional increases. The USD is considered a safe-haven investment and benefits from rising energy prices as the U.S. is a major producer of global oil and natural gas.

DXY – US DOLLAR CURRENCY INDEX – DAILY CHART

www.TheTechnicalTraders.com – TradingView

AUSTRALIAN DOLLAR GAINED +45.15%

The Australian dollar enjoyed a strong rally in 2020 as it gained more than +45%. After hitting resistance at its 1.618 Fibonacci extension, the AUD corrected about 38% of its up-swing. This correction ended when buying resumed at the AUD previous high or the 1.000 support level. Since Jan 2022, the AUD has already appreciated about 9%. This is similar in both percentage and time frame to the S&P 500 (SPY) and the Nasdaq 100 (QQQ) equity markets.

AUD USD – AUSTRALIAN DOLLAR VS US DOLLAR – DAILY CHART

www.TheTechnicalTraders.com – TradingView

KNOWLEDGE, WISDOM, AND APPLICATION ARE NEEDED

It is important to understand that we are not saying the market has topped and is headed lower. This article is to shed light on some interesting analyses of which you should be aware. As technical traders, we follow price only, and when a new trend has been confirmed, we will change our positions accordingly. We provide our ETF trades to our subscribers, and somewhat surprisingly, we entered five new trades last week, four of which have now hit their first profit target levels and two of which have now been closed at a profit. Our models continually track price action in a multitude of markets, asset classes, and global money flow. As our models generate new information about trends or a change in trends, we will communicate these signals expeditiously to our subscribers and to those on our trading newsletter email list.

Sign up for my free trading newsletter so you don’t miss the next opportunity

Successfully trading is not limited to when to buy or sell stocks or commodities. Money and risk management play a critical role in becoming a consistently profitable trader. Correct position sizing utilizing stop-loss orders helps preserve your investment capital and allows traders to manage their portfolios according to their desired risk parameters. Additionally, scaling out of positions by taking profits and moving stop-loss orders to breakeven can complement ones’ success.

WHAT STRATEGIES CAN HELP YOU NAVIGATE The CURRENT MARKET TRENDS?

Learn how I use specific tools to help me understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24 months, I expect very large price swings in the US stock market and other asset classes across the globe. I believe we are seeing the markets beginning to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern start to drive traders/investors into metals, commodities, and other safe-havens.

UNDERSTAND HOW TO NAVIGATE OUR VOLATILE MARKETS!

GET READY, GET SET, GO -I invite you to learn more about how my three ETF Technical Trading Strategies can help you protect and grow your wealth in any type of market condition by clicking on the following link:   www.TheTechnicalTraders.com

Have a great day!

Chris Vermeulen
www.TheTechnicalTraders.com

Chris Vermeulen has been involved in the markets since 1997 and is the founder of Technical Traders Ltd. He is an internationally recognized technical analyst, trader, and is the author of the book: 7 Steps to Win With Logic

Through years of research, trading and helping individual traders around the world. He learned that many traders have great trading ideas, but they lack one thing, they struggle to execute trades in a systematic way for consistent results. Chris helps educate traders with a three-hour video course that can change your trading results for the better.

His mission is to help his clients boost their trading performance while reducing market exposure and portfolio volatility.

He is a regular speaker on HoweStreet.com, and the FinancialSurvivorNetwork radio shows. Chris was also featured on the cover of AmalgaTrader Magazine, and contributes articles to several leading financial hubs like MarketOracle.co.uk

Disclaimer: Nothing in this report should be construed as a solicitation to buy or sell any securities mentioned. Technical Traders Ltd., its owners and the author of this report are not registered broker-dealers or financial advisors. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer. Never make an investment based solely on what you read in an online or printed report, including this report, especially if the investment involves a small, thinly-traded company that isn’t well known. Technical Traders Ltd. and the author of this report has been paid by Cardiff Energy Corp. In addition, the author owns shares of Cardiff Energy Corp. and would also benefit from volume and price appreciation of its stock. The information provided here within should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. Technical Traders Ltd. and the author of this report do not guarantee the accuracy, completeness, or usefulness of any content of this report, nor its fitness for any particular purpose. Lastly, the author does not guarantee that any of the companies mentioned in the reports will perform as expected, and any comparisons made to other companies may not be valid or come into effect.

Chris Vermeulen Archive

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