Dollar Trading Mixed Against Most Majors

The U.S. Dollar is trading mixed versus a basket of major currencies at the mid-session. This morning’s better than expected initial claims report helped pressure the Dollar as it renewed interest in higher yielding assets.

The U.S. Dollar is trading mixed versus a basket of major currencies at the mid-session. This morning’s better than expected initial claims report helped pressure the Dollar as it renewed interest in higher yielding assets. The rally fizzled when buying dried up. Position evening ahead of tomorrow’s U.S. Non-Farm Payrolls Report is most likely the cause of the drop in volume and interest on the short-side of the Dollar.

The EUR USD is managing to hold on to gains despite a failure to take out last week’s high at 1.5144. The European Central Bank left interest rates unchanged as expected and laid out its plan to begin reducing financial stimulus. ECB President Trichet’s call for a stronger Dollar helped reduce early demand for the Euro while helping to stabilize a weaker Dollar.

The GBP USD surged to the upside overnight but failed to hold on to its gains. Concerns about the economy are helping to limit buying interest at current levels. The short-term range at 1.6878 to 1.6271 has created a retracement zone at 1.6575 to 1.6646 which this currency pair seems to be content with holding. Look for sideways trading while the market remains inside this zone. A break under 1.6575 will indicate weakness. Regaining and holding 1.6646 will be a sign of strength.

The USD JPY is trading higher for the third straight day and managing to hold on to its early session gains. Earlier in the week, the Bank of Japan announced new stimulus measures. Since the BoJ doesn’t meet formally until December 17th, expectations are for this counter-trend move to continue until then. Traders are pricing in the possibility of an intervention although no formal announcement has been made. The charts indicate that a test of 88.57 is likely if upside momentum continues.

The USD CHF continues to trade lower because of the increase in demand for higher yielding assets; however, it remains range bound between .9918 and 1.0176. The fear of another intervention by the Swiss National Bank is helping to curtail the selling pressure.

Calls for a stronger Dollar by the ECB’s Trichet helped strengthen the USD CAD this morning. The steady to better equity and oil markets are helping to hold up the Canadian Dollar. Technical traders seem to be content with holding this market inside of a retracement zone at 1.0459 to 1.0537.

Greater demand for higher yielding assets is helping to boost the AUD USD at the mid-session. The chart pattern suggests that a breakout to the upside over .9322 is possible. Earlier this week, the Reserve Bank of Australia started this current rally when it increased its benchmark interest rate 25 basis points to 3.75%. Holding above .9230 should help to maintain the upside momentum. A failure to hold .9175 could trigger a sharp correction.

Once again the NZD USD has backed down following a test of a key retracement zone at.7272 to .7332. New support rises to .7182. Higher equity markets are needed today to give this market a boost, or it may begin a correction back to .7161. Demand for higher yielding assets is barely holding up this market which means a weaker equity trade later in the day is likely to send this market lower.

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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