U.S. Dollar Renews Strength

The U.S. Dollar is renewing the strength it showed earlier in the week as the market failed to follow-through to the downside following yesterday’s hard sell-off.

The U.S. Dollar is renewing the strength it showed earlier in the week as the market failed to follow-through to the downside following yesterday’s hard sell-off. The lack of follow-through to the upside in many of the higher risk assets like equities and crude oil is also contributing to the weakness. Today’s strength in the Dollar came about when the bears failed to show up this morning. This little hesitation was enough to scare shorts out of the market in a big way.

Early this morning it was reported that Personal Income was flat and Personal Spending was lower. This reflected the fact that consumers are spending less and paying off credit. The Chicago PMI Report showed a positive gain but this was offset by a drop in Michigan Sentiment.

The EUR USD failed to follow-through yesterday’s high and a key 50% resistance price. The chart indicates that 1.4696 is the next downside target.

There was no follow-through to the upside in the GBP USD either. This was the strongest market for the week as of yesterday’s close. Today’s action represents a resumption of the downtrend that took place last week when U.K. GDP came out worse than expected. Look for an acceleration to the downside if this currency can clear 1.6470.

The USD CAD took out yesterday’s high but has backed off since. This move erased all of yesterday’s losses and indicates that falling equities and crude oil along with the threat of an intervention could keep this trend up for a long time. Today’s momentum indicates that a rally to 1.0871 is possible.

The strength in the Dollar has the USD CHF in a position to challenge 1.0285. Look for an acceleration in this currency pair late in the session if equity prices and gold continue to erode.

Downside momentum indicates that the USD JPY is likely to test a major 50% price at 90.15. A trade through 90.08 will turn the main trend to down.

The Australian Dollar failed at a 50% price at .9182. Downside momentum is building as traders dump higher yielding assets. This market is set up for a further decline to .8948.

Heavy selling is also pressuring the NZD USD. The chart indicates that .7159 is possible, followed by a decline to .7047.

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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