Technically Speaking

Currencies Shift Direction

The U.S. dollar index was seen as a safe haven for investors during the coronavirus scare, but prices are now coming down as anxieties ease (DTN ProphetX chart).

U.S. Dollar Index:

The U.S. Dollar Index fell 1.57 points last week to 98.295, back below the 100-day average to the lowest finish in two months. The spread of the coronavirus triggered volatile trading in the dollar, causing the dollar to plummet at first when the Federal Reserve lowered interest rates. The decline quickly turned into a rally after March 9 as investors sought a safe haven in the U.S. dollar. The threat of coronavirus is not gone yet, but anxieties have eased as the rate of new U.S. infections have slowed, and it appears investors are now more willing to take on risk again. Fundamentally, it is difficult to be too bearish as the U.S. economy is still apt to compare favorably with the rest of the world. Technically, the March 20 high near 103.00 was a little below the 103.82 high in January 2017 and leaves behind a possible double-top.

Brazilian Real:

The July contract is the most active futures for Brazil's real and it closed up 0.69 cent last week, ending at 18.65 cents per U.S. dollar. The close was also nearly 2 cents higher than the low in May and was the most bullish action seen in 2020 so far. Even before coronavirus hit, Brazil's economy was already struggling and the real lost 33% of its value versus the U.S. dollar when it reached a record low of 16.73 cents on May 14. Now, Brazil is seen as a hot spot for the virus and GDP is expected to be down sharply in the first half of 2020. Technically, the weekly stochastic has turned higher, giving U.S. corn and soybean prices temporary relief from the falling real's bearish pressure. However, there is little reason to expect much more than a temporary hiccup in prices as the fundamental outlook for Brazil remains bleak.

Russian Ruble:

The June Russian ruble closed up 0.0275 cent last week, ending at 1.417 cents per U.S. dollar, the highest weekly close in over two months. For commodity markets, Russia is the world's largest wheat producer, and the ruble plays an important part in U.S. wheat export opportunities. Russia limited its wheat export sales at the end of the current 2019-20 season to protect domestic wheat prices, but another large wheat crop is expected in 2020. Like Brazil's real, the ruble was on a downward slide early in 2020 and lost 26% of its value versus the U.S. dollar by the time it hit a low of 1.187 cents on March 18. Prices have been gradually rising since then and are now encountering resistance at 1.43 cents, the 100-day average. Getting accurate information about Russia's economy is difficult, but it is fair to say they are also struggling from their own coronavirus experience. Technically, the trend is still up, but probably doesn't have much upside potential with prices now encountering resistance.

Comments above are for educational purposes and are not meant to be specific trade recommendations. The buying and selling of commodities and futures contracts involve substantial risk and are not suitable for everyone.

Tregg Cronin can be reached at

Follow Tregg Cronin on Twitter @5thWave_tcronin

Comments above are for educational purposes and are not meant to be specific trade recommendations. The buying and selling of grains and grain futures involve substantial risk and are not suitable for everyone.


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