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CURRENCY ANALYSIS

Final Leg of the Dollar Bull Market

Final Leg, Dollar, Bull, Market, Currency Analysis, fx  trader, forex US Dollar Watch

After the third quarter of 2016 maintained a neutral status with classic currency and commodity asset rotation throughout their individual consolidations, the fourth quarter of 2016 resumed the forecast rallies in the U.S. Dollar, as well as decline in Gold. Although Oil continues to be in an extended, irregular topping pattern, we continue to forecast the subsequent decline.

In this article, we will remain focused on the long-term outlook in these assets. We continue to believe that the U.S. Dollar is the lead indicator across the board, and the higher than normal volatility of 2016 will gradually subside into the end of 2017.

EUR/USD

Final Leg, Dollar, Bull, Market, Currency Analysis, fx  trader, forex eurusd

As stated the last two years of articles for FX Trader Magazine, our long-term forecast has continued to stress the top in the EUR/USD since 2009 [at 1.4740], as well as the forecast subsequent decline to 1.1555 for March 2014 in the ongoing seven-year Dollar Bull Market Forecast. After the strong, premature decline to 1.0460 in March 2015 produced weak complex medium-term technical aspects, the continued sideways consolidation and top building for an additional three months beyond our forecast through July 2016 has not impacted the bullish long-term view. We continue to forecast the decline still to .9890 through January 2017, as well as the forecast further decline to .9330 strong long-term support through March 2017 in the even stronger dollar outlook through mid-year 2017. We are forecasting a subsequent six months’ consolidation [ .9330 – 1.1020] through December 2017 as a long-term bottom begins to build for the Euro into 2018. Only a monthly close in EUR/USD still above 1.1715 would dampen the bearish long-term technical aspects of the market, and result in a strong retest of 1.2230 in a higher, choppy outlook [1.0880 - 1.2230] over the subsequent six months.

GBP/USD

Final Leg, Dollar, Bull, Market, Currency Analysis, fx  trader, forex gbpusd

GBP/USD has remained bearish in our long-term outlook for the last two years. The extremely strong and historic “Brexit Decline” in GBP/USD has produced a premature decline to the 1.3655 ongoing long-term objective for October 2016. In the process of this premature decline, the further strong decline through 1.3655 to 1.1950 developed the strongest complex medium-term divergences in a year.

We are forecasting a weak retest of 1.3180 weak medium-term resistance, down sharply from 1.3795, through February 2017, then retest 1.2205 through April 2017 in the forecast subsequent, broad, and volatile bottoming formation and consolidation into December 2017 [1.1950 – 1.3445]. Only a monthly close back below 1.1950 would reignite bearish medium-term momentum, avert the further rally to 1.3180, and result in a deeper decline to 1.1220 weak long-term support over the subsequent three months. NOTE: EURGBP decline to the .7070 long-term objective for January 2015 complete; decline again to .7810 through March 2017 in [.7580 - .8795] into September 2017.

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