Greenback on the slide
THE US dollar did not maintain its long July upward break against the Swiss franc and mark, it has steadied at the bottom of those patterns. I consider this choppy ranging as a top building indication. This signals the dollar will fall in exchange value. I am not ruling out new highs, but I believe any greenback advance will be unlikely to be maintained and in due time force a weaker position.
Against the yen the recent volatility is phasing itself out and a bottoming out positive is underway. The dollar could go lower but this appears unlikely. The US dollar is slipping against the Canadian and Australian dollar and lower or sideways ranging should come.
British pound is strong against European currencies although its driving force has weakened against the stronger currencies. Nevertheless clear breaks of 2.23 Swiss francs and 2.54 marks would be necessary to confirm meaningful peaks have been reached.
The pound's rally against the US dollar has been halted making a close of $1.525 necessary to indicate higher scope. Sterling is merely ranging against the yen following first of July failed downward break and this ranging is probable to continue.
Deutschemark has fallen below both its March 1992 and March 1993 lows versus the dollar. Support from the extreme 1991 lows should absorb downward risk. A rally back into the previous trading range will be required to reconfirm the solidness of that floor. Against the yen the decline appears over extended therefore any meaningful weakness will be difficult to maintain. People are too negative on the mark.
The mark continues to show strength against all European currencies except the Swiss franc and all resistance is likely to be further challenged. The aggressiveness of the marks rebound is particularly meaningful against the French franc.
Swiss franc is quietly rolling along against the US dollar and the lows of the latest two years should support against downward risks.
Japanese yen is firm against European currencies but the advances are losing consistency. A topping out process has begun considering its volatility with the dollar. There is a weaker phase ahead for the yen and advances are not likely to be maintained.
Leon Richardson is a well-known financial commentator and investor