US dollar index at risk of technical slippage warns analyst, pound sterling forecasted to push higher in short term

Details

Published on Monday, 02 July 2012 09:48

Written by Will Peters

International Money Transfers at our sister site

"I think these two currencies could be two that relatively outperform the rest of the board for this quarter but stay fairly mundane vs. one another" - William Moore at RBS.

The US dollar (Currency:USD) took a knock on Friday when a sharp boost to risk appetite saw the US currency sold-off. The extend of the sell-off has resulted in some interesting changes to the technical charts.

(Our latest FX forecasts are published on our IMT site, access is issued via this Facebook entrance path).



According to an analysis at Investors Intelligence, the US Dollar Trade Weighted Index encountered strong resistance beneath the early-June high on Friday. 

"The subsequent reaction sent valuations back towards support at the 'Trough' Key Day Reversal low plotted on 18 June at 81.161 (near the 50-day moving average).  A breach of that platform would complete a top area, which could force further slippage towards the longer-term MA.  We watch to sell such an event," says a note to clients.

Meabwhile, the pound dollar exchange rate has seen key support levels hold.

"The reliable support level around 1.5299 held! So despite the very long term picture being stuck in a 1.53/1.65 range the bias for the next move within there is slightly GBP positive back to the 1.6050 area," says a pound sterling technical analysis from William Moore at RBS.

Moore, however, forecasts a fairly mundane view with regards to GBP-USD over the next quarter as the 1.53 level looks particularly supportive whilst the 1.06041/6167 level looks like very strong overhead resistance.

"I think these two currencies could be two that relatively outperform the rest of the board for this quarter but stay fairly mundane vs. one another. Some other short term levels are the 1.5780 resistance level and the important support level at 1.5606," says Moore.