Long-term investments in currency pairs! The USD/DKK pair!

The US Dollar Danish Krone currency pair (USD/DKK) in 2018 was trading in a steadily upward trend and as the result strengthened by 12% (it is more than 7,100 points). The upward trend of the USD/DKK pair in 2018 fully responded to the correctional movement against the decline in 2017. So by the end of 2017, this pair had gone down more than 17% and 12,500 points.

The main driver of the movement of this pair was the general dynamics of the US dollar index, which is accurately shows up on the dynamics of the USD/DKK pair. Technically, the movement of this pair in 2018 responded to the correction against the decline of 2017. As a result, USD/DKK reached a significant resistance of 6.56, which corresponds to the Fibonacci retracement level of 50.0 from the 2017 high to the 2018 low.

USD/DKK chart (blue line – the US dollar index)

Expectations from USD/DKK for the beginning of 2019

The main driver of the pair USD/DKK is the dynamics of the American currency. The USD/DKK movement will directly depend on the expectations for the US dollar index, which is due to the high degree of correlation between the US dollar index (DXY) and USD/DKK.

From the start of 2019, the US dollar index has been trading downward, limited to a general upward trend and remaining in the uncertainty between the highs (97.00) and the lows (95.20) of the current year. But it is forming a clear support and attempts to strengthen on the rebound  from the support and maintaining the general uptrend.

The US dollar index chart

 

At the beginning of 2019 it is expected that the USD/DKK pair will maintain an uptrend with a further test of resistance 6.70 and 6.91. The zone of uncertainty and possible reversal is located near the level of 6.56 (Fibonacci retracement level 50.0 from the high of 2017). The main support levels are located at the levels: 6.50 and 6.40.

An alternative sale is possible with the general weakening of the US currency and the USD/DKK pair consolidating below the 6.50-6.40 zone. That will indicate the potential for correction against the upward movement in 2018 and will open the way to support levels: 6.30 and 6.20.

 

The main risk factor is the general geopolitical risks and the slowdown of the global economy affecting in particular the dynamics of the US dollar.

Anton Hanzenko