Trading CFDs carries considerable risk of capital loss. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.

You are here: Home > Blog > Technical analysis - Emerging forex – December 2017

Technical analysis - Emerging forex – December 2017

December 21, 2017

December has not been volatile so far on emerging currencies as in other years when movements on exotic currencies tended to be more important.

The passing of baton between Yellen and Powell to the Fed has made the markets anxious for the Fed monetary policy outlook. Better wait for the first meeting in February before taking a position on the Dollar because the inflation trend (and the forecasts of Yellen on at least 2 years to reach the 2% target) would not justify three rises in the cost of US money.

Different stories in the emerging world. China has raised rates following the Fed, Brazil is in difficulty due to the continuous decline in soft commodities prices, Mexico is penalized by the approval of the tax reform of Trump. So let's see in details the prospects for the beginning of 2018 for the main emerging local currencies.

USDCNY

Here we can find a noticeable crossover of resistances that is worth following.

From October onwards, UsdCny reaction is substantially blurred with a classic phase of uncertainty delimited by decreasing highs. The Dollar has therefore not found the strength to go further.

Ideally we should be facing a fourth wave of a bearish movement, a scenario that would be neutralized in the case of a net move above 6.70. At that point, bearish trend line, upper triangle wall and beam of moving averages would be won and there would be new rising prospects for UsdCny at least up to 6.81 advising the closure of long positions in Cny.

usdcny2112.jpg

USDMXN

usdmxn2112.jpg

The tax reform of Trump is considered as negative by the Mexican peso owners who preferred to sell in December making UsdMxn come back over 19.  As mentioned last month, the net long exposure of Mxn by hedge funds is still abundant and this will hardly allow the Peso to strengthen itself in the very short period. The idea, however, is to see UsdMxn converge towards the regression line currently at 18 in the coming months. The Peso is still a largely underestimated currency in fundamental terms.

USDBRL

usdbrl2112.jpg

The rather strong decline in the price of soft commodities (sugar in the first place) also hit the Brazilian Real unable to reach the long-term uptrend line in recent months. Even the monthly Macd is beginning to prepare a bullish signal that in fact would end the slow accumulation phase that the market has developed since 2016. Area 3.50 represents the most critical resistance, going further would have a negative impact on the Real for the next months.

USDZAR

usdzar2112.jpg

A good reaction from the South African Rand in December, also favoured by a favourable seasonality that could however turn out to be a boomerang in January. In the last 30 years, in fact, UsdZar has risen in 22 cases, confirming that owning Rand in the first month of the year does not offer great earning prospects.

Technically, however, we can appreciate UsdZar unwillingness to go back over the old bullish trend line. A sign of vitality that at this point does not rule out in the next few months a new attempt by UsdZar to go and test the supports of area 12.


Related articles

GBPUSD trading above the 200 MA

February 03, 2019

The GBPUSD pair has seen a strong rise in 2019 so far. The technical picture on the daily chart even suggests that there's more upside ahead.
Read more


Emerging Forex – May 2018

May 15, 2018

This month is once again particularly eventful for the emerging world.
Read more


Forex majors – May 2018

May 04, 2018

The dollar is the protagonist again thanks to the combined effect of 10-year US yields at 3% and a less aggressive ECB pressing on the need to normalize the monetary policy in Europe.
Read more


Bitcoin is slowly showing more strength

April 22, 2018

Bitcoin has been in a falling trend since the start of the year, but the cryptocurrency is currently attempting to break above resistance.
Read more


Emerging Forex - Technical analysis  - April 2018

April 19, 2018

The month of April is proving to be full of events for emerging currencies which have suffered from the intensification of trading tensions between United States and China concerning duties, but also from the renewed political tensions between United States and Russia over the Syrian issue.
Read more


Forex majors analysis – April 2018

April 05, 2018

After the month of March we are now entering the month of April, in which the seasonality produces its effects.
Read more


Emerging Forex Market – March 2018

March 22, 2018

The emerging currency market is waiting for the evident rise in rates in the United States from the Federal Reserve.
Read more


Forex Majors technical analysis – March

March 08, 2018

A more “hawkins” Powell than expected gave a nice boost to the US dollar with the 2-year interest rates back to 2.25%.
Read more


Emerging Forex – Month of February

February 21, 2018

February has been quite a volatile month so far for the emerging currencies market together with some interesting strengthening stories (South African Rand) and others not so much (see Brazilian Real and Russian Ruble).
Read more


Forex Majors Technical Analysis – February 2018

February 08, 2018

The month of February started with a weak Dollar against all the major world currencies, a situation that, in a slightly disordered way, Draghi first and then Trump tried to contain with the usual declaration of the need for a strong Dollar.
Read more


Forex Emerging Market - January 2018

January 24, 2018

The month of January was quiet with some currencies that emerged against the US dollar.
Read more


Majors Technical Analysis – December 2017

December 07, 2017

The usual analysis of the beginning of the month starts with the main exchange rates in a very interesting month for many reasons.
Read more


Emerging Forex Technical Analysis November 2017

November 24, 2017

The month of November is proving to be very tormented for emerging currencies, but there is much more than this.
Read more


Forex Majors Technical Analysis – November 2017

November 07, 2017

November started with a somewhat anonymous Federal Reserve meeting that still does not dismantle the market expectations of a new rate hike in sight for the latest 2017 meeting in December.
Read more


Emerging Markets - Forex Analysis  Month of October

October 25, 2017

A negative September for emerging currencies that lost 3% against the Dollar from the peak of the ninth month of the year.
Read more


Forex Majors Technical Analysis in October

October 13, 2017

In the month of October a lot of attention will be focused on Europe for political reasons as well as for economic reasons.
Read more


Emerging Markets - Forex Analysis  Month of September

September 27, 2017

In September, the two major banks in the world have shown how the normalization of the monetary policy will continue, but at the same time will be accompanied by a long period of low rates.
Read more


Swing Trading in Forex

September 24, 2017

When Charles Dow invented swing trading in the late 1908, he could not imagine such a great diffusion of this simple global yet very effective technique.
Read more


Forex majors technical analysis – September

September 13, 2017

The ECB meeting of last Thursday officially reopened the final part of 2017 for financial markets.
Read more


Forex Market Movers – Month of September

September 07, 2017

September is usually a particularly interesting month for every financial market because it follows August miserable macroeconomic data and appointments with major central banks.
Read more


Emerging Markets - Forex Analysis - Month of August

August 18, 2017

August is usually a volatile month for emerging currencies but it is also useful in estimating possible entry points for any tactical trade in the last part of the year.
Read more


FX Majors Technical analysis– Month of August

August 03, 2017

In the month of July the Dollar has been the negative protagonist and the Euro the positive one, with other currencies more commodity-oriented and capable of earning different positions.
Read more


Forex Market Movers - Month of August

July 31, 2017

August is traditionally a volatile month for the currency and financial world in general and therefore the economic data that could represent a market mover must be kept under close observation.
Read more


Forex Emerging Markets – Technical Analysis Month of July

July 05, 2017

The emerging world starts the month of July under unfavourable conditions. June has been a difficult month for some currencies, first of all the Russian Ruble and then the Brazilian Real, due to rising rates in the US, but also to the continued deterioration in oil prices.
Read more