Dollar Strength Remains Weak vs Other Asset Classes, Despite Rising Long-Term Yields

by SIACharts.com

For this weeks edition of the SIA Equity Leaders Weekly we will follow up on last weeks discussion where we showed the upward movement in the 30 year yield. With this strength in the yield we now have the potential for a strengthening U.S. Dollar, so we are going to take a look at the U.S. Dollar Index Continuous Contract and also the United States Dollar/Canadian Dollar to see if the perceived strength is showing up there.

U.S. Dollar Index Continuous Contract (DX2.F)

It has been over 4 months since we last looked at the DX2.F, as there has really been a lack of movement until recently. Looking at the chart on the right we can see that DX2.F has now reversed upwards and has run into its first resistance level at $82.34. Should this strength continue, the next resistance level at $84.83 may then come into play.

With the SMAX at 4, we are still seeing short term weakness against the other asset classes but will continue to monitor for additional strength.

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844_1_20130226_370068_0_0_2177403

United States Dollar/Canadian Dollar (USDCAD)

Having last looked at the USDCAD a little over 3 months ago, we now see we have seen upward movement with the USDCAD now closing in on resistance at $1.0534, corresponding with the declining trendline. Further strength may then see the next resistance at $1.0852 come in to play. To the downside support is now at 0.9827 and again at 0.9351, the low from 2011.

The SMAX continues to show a weak 2, showing short term weakness against the other asset classes just as we have seen above with the USD Index. Both charts we have looked at here today show us weakness vs. alternative asset classes but are starting to build patterns that could be bullish to the upside. Of course we won't make the call until we have confirmation but because of the importance of the USD on other asset classes such as Commodities this is a trend we must watch closely.

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