U.S. Debt Concerns Plague Dollar

The U.S. Dollar remained under pressure at the mid-session although up slightly from the opening. With the lack of major economic news this week, global investors are being forced to worry about another round of U.S. debt.

The U.S. Dollar remained under pressure at the mid-session although up slightly from the opening. With the lack of major economic news this week, global investors are being forced to worry about another round of U.S. debt. Throughout the week, the Treasury is going to add to its already massive debt pile by another $118 billion. This news is weakening the Greenback.

Aside from the debt worries, trading is thin and lifeless at the mid-session. One can only speculate as to where the Forex markets can move, but without major player participation, large movements are expected to be muted throughout the week. Technical factors could drive the Dollar lower because of overbought conditions. Chart patterns indicate there is room to the downside before the Dollar hits meaningful support.

The EUR USD is up at the mid-session. A new main bottom has been formed at 1.4217. The chart pattern suggests that upside momentum may be building with a possibility for a rally back to 1.4680 over the near-term. Concerns over U.S. debt issues are encouraging traders to lighten up their short Euro positions.

The GBP USD is appears to be building a small support base. The lack of fresh negative news has led to the absence of sellers. Watch for a short-covering rally if 1.6022 is penetrated.

The USD JPY is trading inside of a tight range. Upside momentum is slowing which makes this market vulnerable to a short-term correction. The daily chart pattern suggests a possible pull-back to 90.77 over the near-term. Investors seem content with holding this market in a range until after the first of the year when fresh economic data will be made available.

The old top at 1.0337 appears to be forming short-term support for the USD CHF. If this support fails, this market could accelerate to the downside. The current pattern suggests a break to 1.0212 is possible over the near-term.

The USD CAD is under pressure at the mid-session. Earlier this morning, this market broke through a retracement level at 1.0459. This action is triggering an acceleration to the downside which could fuel a further decline to a main bottom from earlier in the month at 1.0405.

The AUD USD is continuing to rebound off the 50% price at .8780. The current rally has helped form a new main bottom at .8734. The short-term charts suggest a rally back to .8964 is likely over the near-term before new selling pressure surfaces. Stronger demand for higher yields is helping to support the Aussie.

Short-covering and demand for higher yielding assets is helping to push the NZD USD higher at the mid-session. A new main range has formed between .7318 – .6970. Upside momentum could drive this market to .7144 before selling pressure resumes. Firm global equity markets and weak Treasuries are stirring up 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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