U.S. Dollar Tumbles as Greece Tensions Ease

The U.S. Dollar is trading lower at the mid-session as tensions eased regarding the fiscal problems in Greece.

The U.S. Dollar is trading lower at the mid-session as tensions eased regarding the fiscal problems in Greece. Some traders feel that a resolution will be reached which may involve aid or stronger assurances that Greece will strictly follow its newly proposed budget.

The EUR USD experienced a choppy two-sided trade early in the session. Continue to look for volatility, highlighted by a choppy trade until the European Central Bank, European Union or International Monetary Fund offers a viable solution to the Euro Region’s fiscal problems.

Volatility and choppiness is affecting the British Pound at the mid-session. Besides the weak economy, investors are now having to deal with the possibility that the U.K. will suffer the same fate as Portugal, Spain and Greece and have its debt rating reduced because of its huge budget deficit. Furthermore, news that the June election could result in neither party receiving a majority is also hurting the British Pound.

The USD JPY is little changed at the mid-session, but this trading pattern could shift quickly if risk aversion returns to the markets. Budget problems in Europe, the U.K. and the United States may encourage traders to seek the safety of the lower yielding Asian currencies. The Japanese Yen is taking its clues from the stock market today.

The direction of the USD CHF is being determined by the movement in the Euro. A weaker Euro will increase the chances of a Swiss Bank intervention, thereby strengthening the Dollar versus the Swiss Franc. A short-covering rally in the Euro will pressure the USD CHF.

Stronger gold and crude oil should be helping to pressure the USD CAD, but it looks as if the choppy equity markets are exerting a larger influence on this currency pair. Look for the Canadian Dollar to remain underpinned as long as it is getting support from the commodity complex. A bullish turnaround in the stock market will help weaken the USD CAD late in the session. Some traders feel that dovish comments from Bank of Canada deputy governor Duguay are helping to limit gains. He reiterated that interest rates will hold steady until at least the end of the second quarter. Furthermore, he emphasized a weaker Canadian Dollar scenario is necessary to keep the economic recovery on course.

The AUD USD and NZD USD are feeling downside pressure while trading inside of Friday’s ranges. Technically, these markets are poised to move higher following Friday’s closing price reversal bottom. It looks as if a much higher stock market is going to be needed to drive this market to a strong finish today. Otherwise rallies will continue to be sold.

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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