Dollar Trading Mixed at Mid-Session

The U.S. Dollar is trading mixed at the mid-session with no clear theme at this time.

The U.S. Dollar is trading mixed at the mid-session with no clear theme at this time. Traders may be choosing to stand on the sidelines or lighten-up positions during the two days leading up to the Fed FOMC meeting on January 27.

The EUR USD is holding on to its early morning gains at the mid-session. Gains are being limited by traders taking a precautionary view on developments regarding the Greece budget problem.

The GBP USD is strengthening since the New York opening. Oversold conditions and position squaring are helping to boost the British Pound. The U.K. economy is still the driving force behind this market’s recent weakness. This market is likely to strengthen over the near-term or until more bad economic news hits the wires.

The USD JPY is trading higher following a volatile week which saw the Greenback lose ground. News that Bernanke will be reappointed is helping to support demand for higher risk assets. This market could turn around quickly to the downside today if U.S. stock markets weaken and demand for lower yielding assets rises. The Bank of Japan is expected to leave interest rates and stimulus alone at this week’s meeting, but could threaten to intervene if this currency pair drops below 90.00.

The USD CHF is trading lower overnight after continuing last week’s late session reversal. The chart pattern suggests that this market is likely to continue to weaken until it reaches a key support zone at 1.0312 to 1.0269. Traders should also watch the Euro. A sudden drop in the Euro versus the Swiss Franc could lead to renewed talk of intervention by the Swiss National Bank.

Oversold conditions in gold, crude oil and equities are not pressuring the USD CAD as originally forecast this morning. Overall, this market can best be described as rangebound.

Weaker demand for commodities and equities helped to pressure the AUD USD and NZD USD last week. The weakness was triggered by activity in China which signaled the start of a tighter monetary policy. This move is likely to lead to less demand for Australian and New Zealand exports.

At the mid-session, firmer gold and equities are leading to light short-covering. This week the Reserve Bank of New Zealand is likely to leave interest rates unchanged while remaining committed to leaving rates low until late 2010.

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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