Dollar Strong on Speculation of Bad Stress Test Results

There is early strength in the Dollar this evening as traders havebecome more risk adverse.  The bank stress test numbers have beencrunched and it looks as if traders don’t like what they are seeing.

There is early strength in the Dollar this evening as traders have become more risk averse.  The bank stress test numbers have been crunched and it looks as if traders don’t like what they are seeing.

Speculators are going to either look for problems in the wholebanking industry or isolate on one particular bank.  Traders shouldwatch for unusual activity in individual banks stocks to see if theherd has singled out the weak one. The public may react by triggering arun on a bank if word leaks out there are problems.

Like I said late last week, between now and May 4th when the finalstress test reports are issued, the Forex markets may be entering anextremely volatile time period. Traders could flock to the Dollar in abig way if there is even a hint of any banking problems.  The only wayto limit losses in the Euro this week is if the U.S. Treasury auctionruns into problems this week.  This $100 billion auction takes placethe first three days this week.

In early trading the EUR USD is continuing the weakness from late Friday.  Based on the technical closing price reversal on the 60 minute chart it appears to be on a path for a retracement to 1.3092 – 1.3043.

Once the market reaches this target zone, there may be a short-covering rally back to 1.3196 so don’t get trapped selling weakness in the hole.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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