Dollar Firms after Weaker Opening

The U.S. Dollar is regaining some of its early morning loss as equity markets could not follow through to the upside after a strong opening.

The U.S. Dollar is regaining some of its early morning loss as equity markets could not follow through to the upside after a strong opening. This led to decreased demand and profit-taking in some of the higher risk markets.

News that the CIT Group was going to get bailed out triggered demand for higher yielding assets overnight. This move spilled over to the New York opening as all major
Forex markets with the exception of the Japanese Yen posted strong gains versus the Dollar.

Demand for higher risk assets dissipated as speculators refused to chase U.S. equity markets higher after the opening. Weakness developed which fueled a decline in the Forex markets.

Technically, all of these markets are dealing with either old support/resistance levels or retracement points. This is giving the major currencies a range bound look. The EUR USD and GBP USD are trading higher but below their June tops. This is the same look on the NZD USD and AUD USD charts. Collectively the rallies in all of these markets, has added up to a bearish Dollar index.

Look for the USD JPY to weaken if U.S. equity markets begin to weaken substantially.

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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