Dollar under Little Pressure Following Uneventful Night

The U.S. Dollar is trading under a little pressure following an uneventful night session.

The U.S. Dollar is trading under a little pressure following an uneventful night session. This could be an indication on how the market is expected to trade the rest of the week ahead of Friday’s U.S. employment report. This report which is now being treated as a leading indicator is expected to show a slight increase because of government hiring of census workers. Early guesses are for government hiring to contribute to a slight gain in January.

Overbought conditions may contribute to a weaker Dollar this week. Baring any surprises, the Dollar could see a choppy trade with a bias to the downside as traders pare positions ahead of Friday’s jobs data.

Overnight, the EUR USD is trading better. Upside momentum could take this market back to the last main bottom at 1.4029. Key support remains 1.3800. This price represents a major 50% retracement level. The Euro is ripe for a short-covering rally, baring any flare-up of problems in the Euro Zone out of Greece or Portugal.

The GBP USD continued to weaken overnight on the heels of a negative outlook for the U.K. economy. Traders are pessimistic about how the economy will respond following the ending of the Bank of England’s quantitative easing program. Early signs indicate that bearish traders are respecting the late December main bottom at 1.5832.

The USD JPY is trading flat to a little better after early session weakness. Calm trading conditions will be supportive to the U.S. Dollar while fear will drive traders to the Japanese Yen.

Trading conditions have calmed in the USD CHF after last Friday’s surge to the upside. The weaker Euro versus the Swiss Franc late last week may have triggered an intervention by the Swiss National Bank. Traders should continue to monitor the situation in Greece to see if it triggers another sharp break in the Euro. Based on current conditions, the USD CHF may break back to 1.0495 before finding support.

The USD CAD rallied last night, but buyers stopped short near the December top at 1.0745. Demand for higher risk and overbought conditions could trigger a profit-taking break today. The chart indicates this market is vulnerable to the downside, provided gold, crude oil and equities show an upside bias.

The AUD USD is trading slightly weaker this morning ahead of the Reserve Bank of Australia monetary policy announcement on Tuesday. Traders are approaching this report with caution as sentiment has shifted toward the RBA leaving interest rates unchanged. Last month’s news that China will begin tightening its monetary policy is being seen as a threat to the Australian economy and currency. This has been putting pressure on the Aussie as traders feel the RBA will have no reason to hike its benchmark rate at this time.

Oversold conditions are helping to boost the NZD USD overnight. Buyers stepped in near the late December bottom at .6970. Short-covering could trigger a closing price reversal bottom today. Shorts appear to be lightening up positions ahead of tomorrow’s RBA report which could have an influence on the New Zealand economy. Demand for risk could also help support this market today.

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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