Dollar Mixed; Euro May Post Reversal Bottom

The U.S. Dollar is trading mixed against most majors as traders try to decide whether it has reached the end of the rally, This morning’s surge to the upside in the March Dollar Index fell short of the recent main top at 81.43 before turning lower.

The U.S. Dollar is trading mixed against most majors as traders try to decide whether it has reached the end of the rally, This morning’s surge to the upside in the March Dollar Index fell short of the recent main top at 81.43 before turning lower. This is an indication that the selling may be greater than the buying at current levels. The formation of a secondary lower top will also be a strong sign that this market is getting ready to rollover to the downside.

After touching a new low for the year overnight, the EUR USD turned around as the lack of fresh selling pressure scared some of the weaker shorts out of the market. At the midsession, the Euro is trading higher which puts it in a position to form a closing price reversal bottom. Bullish traders are banking on a resolution of the Greek fiscal crisis to trigger a huge short-covering rally.

The GBP USD is trading lower but inside of Monday’s range. The trend is still down and the fundamentals bearish, but traders have stopped the downside pressure as they reassess the developing political situation in the U.K. A recent poll shows that the Minority may gain control of the Parliament for the first time since 1974. Investors fear that political gridlock will prevent the country from digging out of its mountains of debt.

Despite a stronger stock market today, the USD JPY remains under pressure but in a tight three-day range. This could be position squaring ahead of Friday’s U.S. Non-Farm Payrolls report or it could mean that investors are anticipating a turnaround to the downside in the equity markets. The charts indicate resistance is building around at major 50% level at 89.30. A further weakening will trigger a test of the .618 level at 88.24.

The USD CHF is under pressure because of the strengthening Euro. Investors have been buying the Swiss Franc as they have become more relaxed about the possibility of another round of intervention by the Swiss National Bank.

This morning’s interest rate hike by the Reserve Bank of Australia is helping to support the AUD USD at the mid-session. Currently this market is testing a .618 level at .9042, putting it in a position to breakout to the upside through the recent swing top at .9070. Stops are likely to be hidden above this level which could trigger an acceleration to the upside.

The RBA’s hike in interest rates is helping to pressure the NZD USD. In addition, traders seem to be concerned about economic growth and employment. Despite higher stocks, gold and crude oil, investors are not interested in the long side of the New Zealand Dollar 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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