U.S. Dollar Finishes Mixed as Demand for Risky Assets Subsides

The U.S. Dollar finished mixed against most major currencies on Thursday as investor demand for higher yields subsided after a strong three day rally.

The U.S. Dollar finished mixed against most major currencies on Thursday as investor demand for higher yields subsided after a strong three day rally.

The EUR USD finished a little better today in light trading. Although the U.S. economy appears to be leading the global economy out of the recession, investors have been seeking the higher yields in the Euro. Traders should continue to focus on the retracement level at 1.4622. Holding above this level could help accelerate this market to the upside. A failure to hold this level will indicate impending weakness.

The British Pound remains one of the weakest currencies because of the faltering U.K. economy. High unemployment, weak consumer demand and a floundering real estate market continue to put pressure on the GBP USD. One of the biggest concerns of traders remains the size of the U.K. budget deficit.

The USD JPY finished higher today despite friendly comments from the Bank of Japan. Early this morning the Yen received a boost when the Bank of Japan left interest rates at 0.1% and announced that a strong Yen may drive prices down in the short-run but could support the economy over the long-run. Oversold conditions most likely limited USD JPY movement to the downside before the Yen was hit with selling pressure.

Weaker equity markets and firmer oil prices kept the USD CAD in a range most of the day. The trend is down and this market is likely to remain weak as long as oil prices hover near the $75 area and equity markets push to new highs for the year.

The USD CHF finished lower today as the Swiss National Bank left interest rates unchanged at historically low levels but hinted that the Swiss economy may be getting ready to turn the corner. The SNB also reiterated that it stands to defend the economy against the threat of deflation.

The NZD USD and AUD USD finished weaker as profit-taking hit the U.S. equity markets. Both currency pairs remain in strong uptrends because of demand for higher yielding assets.

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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