Fed Decision and Economy Control U.S. Dollar’s Fate

The U.S. Dollar is called lower this morning as Asian and European investors turned their attention toward risky assets after standing aside for the past three days. Investors are selling Dollars in anticipation of the Fed leaving interest rates unchanged until at least the end of the year. Traders are also expecting to hear good regarding the global economic recovery from the G-20 meeting later this week. Basically, investors cannot find a reason to buy Dollars other than oversold conditions which were taken care of by the recent two day rally.

The U.S. Dollar is called lower this morning as Asian and European investors turned their attention toward risky assets after standing aside for the past three days. Investors are selling Dollars in anticipation of the Fed leaving interest rates unchanged until at least the end of the year. Traders are also expecting to hear good regarding the global economic recovery from the G-20 meeting later this week. Basically, investors cannot find a reason to buy Dollars other than oversold conditions which were taken care of by the recent two day rally.

The U.S. Dollar is trading weaker this morning following several days of short-covering. The EUR USD is trading at a new high for the year as traders increased demand for higher yielding assets. Higher crude oil and equity prices are helping to support the Canadian Dollar. Traders have set aside their concerns about the U.K. economy and financial system and are buying the GBP USD after several days of extreme weakness. Investors have resumed their interest in the long side of the Japanese Yen after a couple of days of profit-taking. Demand is also driving up the higher yielding AUD USD and NZD USD.

All eyes are on the Dollar at this time as it seems to be the leader while controlling the direction of all assets classes. The assumption of lower interest rates until at least the end of the year and the expected slow recovery in the U.S. economy are two factors driving investors away from the Dollar at this time. Expect the Dollar to remain weak until the Fed reveals when it is going to hike rates and when the economy offers more solid evidence of the start of a recovery.

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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