Demand for Higher Risk Assets Continues as Reports Offer No Bearish Surprises

Traders have been hitting the U.S. Dollar hard in most of the majors at the New York mid-session as reports released earlier this morning offered no bearish surprises.

Traders have been hitting the U.S. Dollar hard in most of the majors at the New York mid-session as reports released earlier this morning offered no bearish surprises. Gains could be limited the rest of the trading session, however, as traders are expected to pare positions ahead of this afternoon’s FOMC minutes.

Investors are aggressively seeking higher-yielding assets in a continuation of the theme that started earlier this week. In the meantime, lower-yielding currencies such as the Dollar and the Japanese Yen have been feeling downside pressure.

Today’s rally picked up strength from the opening fueled by higher equity markets. The rally in the equities which started earlier in the week on a buy recommendation of Goldman Sachs, continued overnight following bullish earnings news from Intel. These two stocks set the tone for the bullish move in the Forex markets as traders gained confidence in holding higher-risk, higher-yielding assets.

Economic reports released earlier in the day helped bury the Dollar throughout the morning on the thoughts that the economy may not be as bad as previously reported. The reports showed that inflation is under control and the industrial production loss was less than previously estimated.

In the EUR USD, the strong surge to the upside thrust this currency pair through a 50% retracement level at 1.4042 and into the next upside target at 1.4112. If upside momentum continues then the next target is the swing top at 1.4201.

The GBP USD is still in a down trend because of the lower top, lower bottom formation but that hasn’t stopped this pair from testing a retracement level at 1.6452.

The USD JPY is the only positive Dollar-based major currency at the mid-session. This pair is continuing the rally which began on Monday following a closing price reversal bottom at 91.73. The chart indicates a move to 94.36 to 94.98 is likely over the short-term.

The USD CHF is still trading inside of the major range of 1.0590 to 1.1020. This pair is currently pressing the bear side of a retracement zone at 1.0754.

The main trend is down in the USD CAD. The break through 1.1437 turned the trend lower earlier in the week. This pair easily penetrated a 50% retracement price at 1.1253. The charts indicate that a test of 1.1142 is likely over the short-run.

The AUD USD is experiencing a strong surge to the upside at the mid-session. The main trend will remain down until the last swing top at .8155 is violated. Gains are currently being limited by a retracement level at .8049.

The NZD USD picked up the rally from yesterday which turned the main trend to up. This morning this market blew through a retracement zone at .6370 to .6422 fairly easily. This zone is now key support. The charts indicate that upside momentum is likely to take this pair to .6549 to .6590 before it meets more solid resistance.

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