Dollar Continues to Get Pounded at the Mid-Session

The U.S. Dollar continued to get pounded at the mid-session in a move that was triggered over the week-end when the G-20 finance ministers failed to discuss the weakness in the Dollar.

The U.S. Dollar continued to get pounded at the mid-session in a move that was triggered over the week-end when the G-20 finance ministers failed to discuss the weakness in the Dollar. In addition, the IMF issued a report basically saying the Dollar was overpriced versus Asian currencies especially the Chinese Yuan.

The Euro broke through the psychological 1.50 barrier. Upside momentum could carry this market to the high for the year at 1.5063.

Sentiment has shifted over the last couple of weeks to the long side of the GBP USD. Overnight the British Pound took out the October high at 1.6691 and now appears ready to challenge the July 2009 top at 1.7042.

Global demand for higher yielding currencies is keeping pressure on the U.S. Dollar and Japanese Yen. The USD JPY is down as the Yen maintains a slight interest rate advantage. Technically, the Yen is trading inside of a retracement zone at 90.15 to 89.64.

Demand for higher yielding currencies is encouraging traders to sell the USD CHF. With downside momentum building, don’t be surprised if this pair returns to the low for the year at 1.0032.

The USD CAD chart pattern suggests that this market could accelerate to the downside if last week’s low at 1.0592 is violated. 1.0545 is the first downside objective. This is followed by a retracement level at 1.0522. Despite economic problems of its own, demand for higher risk assets is taking precedence over the weaker Canadian economy.

The AUD USD is trading sharply higher. This move is a continuation of last week’s late rally which was triggered by bullish comments from the Reserve Bank of Australia. The RBA increased its estimate for GDP while sending the market a signal that interest rates would likely continue to rise. The charts indicate that .9329 is the next upside target while support moves up to .9105.

The NZD USD rallied back to a major 50% price at .7358. Gann angle resistance is at .7375. This forms a key resistance cluster. Upside momentum is expected to overtake this zone on its way to the next resistance level at .7423.

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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