Euro Weakens While Pound Strengthens

By Colin Twiggs
April 22, 2010 3:00 a.m. ET (5:00 p:m AET)

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The US Dollar Index found support at 80 and is headed for another test of resistance at 82. Bearish divergence on Twiggs Momentum (21-day) continues to warn that the up-trend is losing impetus. Failure of primary support at 79.5 would offer an initial target of the January low at 76.5*. Breakout above 82.2 is unlikely, but would test 84*.

US Dollar Index

* Target calculations: 79.5 - ( 82.5 - 79.5 ) = 76.5 and 82 + ( 82 - 80 ) = 84


The weakening dollar suggests stronger gold prices. The precious metal found support at $1120 and is rallying for another test of resistance at $1160. Breakout would signal an advance to $1220*. Rising Momentum (21-day) indicates the start of an up-trend. Reversal below $1120 is unlikely, but would test support at $1080.

Spot Gold

* Target calculation: 1140 + ( 1140 - 1060 ) = 1220

Crude Oil

Crude is consolidating in a narrow range between $84 and $87/barrel — a continuation pattern. Upward breakout would offer a long-term target of $96/barrel*. Reversal below the rising trendline is unlikely, but would warn of another test of primary support at $70. Momentum breakout below the rising trendline would be bearish in the short-term, but a subsequent large trough that respects the zero line would signal a primary advance.

Crude Oil

* Target calculation: 84 + ( 82 - 70 ) = 96


The euro is again weakening, on concerns over Greece, and is headed for a test of support at $1.33. Downward breakout would warn of a decline to $1.29*. Recovery above $1.38 is now unlikely, but would signal an end to the down-trend — offering a target of $1.43*.

Euro US Dollar

* Target calculations: 1.38 + ( 1.38 - 1.33 ) = 1.43 and 1.33 - ( 1.37 - 1.33 ) = 1.29

Pound Sterling

The pound broke through the band of resistance between $1.53 and $1.54, signaling a rally to $1.64. Rising Twiggs Momentum (21-day) confirms buying pressure. The medium-term target is $1.60*.

Pound Sterling

* Target calculation: 1.54 + ( 1.54 - 1.48 ) = 1.60

Japanese Yen

In the long term, bullish divergence on Twiggs Momentum (63-day) signals dollar buying pressure. But unless the next rally manages to break through resistance at ¥100, the greenback is likely to test support at its previous low of ¥80.

US Dollar Yen

In the shorter term, the dollar is again testing resistance at ¥93.50. Upward breakout is more likely, and would signal an advance to ¥98.50*. Reversal below ¥91.50, however, would warn of correction to primary support at ¥88.

US Dollar Yen 6 Months

* Target calculation: 93.50 + ( 93.50 - 88.50 ) = 98.50

Australian Dollar

The Aussie battler retraced to test support at $91.50; downward breakout would warn of a correction. Falling Twiggs Momentum strengthens the warning — more so if the indicator breaks zero. Recovery above $0.94 is less likely, but would offer a long-term target of parity* (expect strong resistance at that level).

Australian Dollar US Dollar

* Target calculation: 0.94 + ( 0.94 - 0.86 ) = 1.02

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