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US Dollar at a Critical Juncture

By Tony Carrion

The recent breakouts in the Euro and British Pound have contained the USD's advance in what we still consider an incomplete wave ((C)) advance on the basis of our proprietary Unweighted Major Currency Average (UMCA)

Trading algos did most of the heavy lifting in EURUSD and GBPUSD, in reaction to Brexit related headlines. Absent headlines to trade off, however, the rest of the move in these pairs has been somewhat unimpressive. Nevertheless, the bounces aren't likely complete, which could still keep the US dollar under some pressure. We'll take a look at some technicals below.

Since the spike up, EURUSD has traded sideways, ususally a sign the rally isn't complete. That said, both the RSI and Stochastic suggest momentum is waning, and a new high is likely to be a final one.

Similarly, Sterling is displaying momentum readings associated with a topping pattern. It would suggest the upside is limited perhaps into the 1.30-1.31 zone before price turns lower in what we consider a larger and still incomplete correction from the pre-Brexit 1.50 high.

Consequently, while the dollar is currently under some pressure, it may only prove to be short-term. 

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