Dollar Up after Yesterday’s Reversal Bottom

The U.S. Dollar rallied overnight following yesterday’s closing price reversal bottom.

The U.S. Dollar rallied overnight following yesterday’s closing price reversal bottom. The first objective was met at 77.77. Upside momentum took the market to the upper end of the retracement range at 77.93. The Dollar may run into some resistance in this area, but a lot will be determined by today’s ADP jobs report and ISM Service report.

The main trend is down on the daily chart, but conditions could shift if 78.22 is penetrated. Breaking back under 77.77 will be the first sign of weakness. If this occurs then look for a resumption of the downtrend with 76.31 to 75.80 the next downside objective.

The USD JPY is trading better overnight. At this time, this currency pair is completing a retracement of the 93.20 to 91.24 range at 92.22. Gann angle support at 91.28 also limited losses overnight. As long as this angle holds as support, the market will remain strong. Fundamentally, traders are reacting to an improving global economy while expectations remain for the Japanese economy to remain under pressure. News of Finance Minster Fujii’s resignation but slight pressure on the market as this event seems to have been already priced in.

The EUR USD weakened into a retracement area at 1.4350 to 1.4319. Holding this area gives bullish traders hope that the Euro will begin to mount a strong retracement of the 1.5144 to 1.4217 range to 1.4680 over the near-term. Traders will be watching for news regarding a possible bailout of Greece. Overnight, the Euro weakened after ECB member Juergen Stark said that markets cannot assume other nations will bail out Greece.

The main trend remains down in the GBP USD but this market is trying to establish support in a retracement zone at 1.6036 to 1.5988. Holding this zone could trigger a short-covering rally. Tomorrow the Bank of England will hold its first meeting of the year. Expectations are for the BoE to hold interest rates steady while continuing to provide stimulus to the economy in hopes of the start of a recovery.

The USD CHF is showing weakness at this time following a test of a 50% price at 1.0379. Look for the weakness to continue as long as this market remains under 1.0409. The bigger picture suggests a break to 1.0212 – 1.0143 is possible following today’s short-term correction. Traders are also anticipating a possible intervention by the Swiss National Bank if the currency continues to appreciate against the Euro.

The USD CAD traded in an inside range overnight with a slight bias to the downside. The direction of gold and crude oil will continue to exert the biggest influence on this currency pair. 1.0459 is resistance. 1.0265 remains the next downside target.

The AUD USD is trading in an inside range and has not confirmed yesterday’s closing price reversal top. At this time the Aussie is hugging a .618 retracement price at .9144. A break through .9091 will confirm yesterday’s reversal top and could trigger a further decline to .8953 to .8902.

The NZD USD weakened overnight while confirming yesterday’s closing price reversal top. This morning the Kiwi is retesting a pair of downtrending resistance angles at .7333 and .7355. Sellers at these two angles could put pressure on this market, setting up a potential break to .7180 over the near-term. Taking out these two angles could trigger an acceleration to the upside.

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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