Eoin Treacy's view

For all the talk of a strong Dollar the only currency that is weaker than it this year is the Turkish Lira and even that is looking very oversold at present following an accelerated decline to test the TRY4 area. 


This graphic from Bloomberg highlights the fact commodity related and Asian currencies have been the first to rebound against the Dollar. 

The Dollar hit a medium-term peak near ZAR18 a year ago and is now testing the lower side of a five-month range against the South African Rand. A clear upward dynamic will be required to signal a return to demand dominance in this area. 

The Dollar is also testing the lower side of a five-month range against the Brazilian Real. 

The Asia Dollar Index has now unwound an overextension relative to the trend mean while the Korean Won and Taiwanese Dollar are both testing areas of previous resistance. 

With a number of currencies breaking medium-term downtrends against the Dollar international investors will be paying closer attention to their respective stock markets not least because valuations in Asia are generally more attractive than in other developed markets. 

South Korea’s Kospi has been ranging in an inert manner for six years. 

Taiwan has been ranging below the psychological 10,000 since the 1990 crash. 27 years is a long time to range and a sustained move above that level would signal a transition to a medium-term demand dominated environment. 

Thailand is testing the upper side of an almost four-year range a clear downward dynamic would be required to confirm resistance in the region of 1600.