Dollar Weakens as Forex Traders Reassess Greece Situation

The U.S. Dollar is trading a little weaker against mostmajors this morning after a sharp rally on Tuesday in response to the news thatthe S&P Corp. slashed the credit ratings of Greeceand Portugal.

The U.S. Dollar is trading a little weaker against mostmajors this morning after a sharp rally on Tuesday in response to the news thatthe S&P Corp. slashed the credit ratings of Greeceand Portugal.

Traders seem a little more optimistic this morning that aviable solution could be reached regarding a bailout of Greece. TheEuropean Union and the International Monetary Fund have been working hard tohammer out an agreement that would provide Greece with enough funding toprevent a collapse in the country’s financial system.

Traders are still looking for clarity regarding thesituation. They want to know the terms of any loans especially the length ofthe funding. Many feel that any proposal will be too short-term and that thecurrent problems will resurface some time in the future. For the moment,however, there seems to be a calm developing which could lead to a powerfulshort-covering rally in the Euro as conditions are ripe for such a move.

The GBP USD is under pressure overnight. Traders continue toreact to the polls showing that there is no clear cut leader which could resultin a hung parliament following the May 6th election. Investors are nervous thata hung parliament will curtail any serious attempts to shore up the budget ofthe U.K.

The stronger Euro is helping to pressure the USD CHF.Traders have pressuring the Swiss Franc in anticipation of further interventionby the Swiss National Bank. In addition, the developing problems in the EuroZone may be putting pressure on the Swiss economy.

A rebound in global equity markets is triggering a strongrally in the USD JPY. After retracing a little over 50% of the recent rallyfrom 91.59 to 94.35, this currency pair found support and is generating enoughmomentum to perhaps trigger another breakout to the upside.

The USD CAD is weakening after an attempt to breakout overthe last swing top at 1.0215 failed. Stronger gold, crude oil and equities arecontributing to the weakness as investors are increasing demand for higheryielding currencies.

Stronger demand for higher yielding assets is also drivingup the AUD USD and NZD USD. Technically, both currency pairs may have reachedoversold conditions overnight. Traders have been supporting the New ZealandDollar recently in anticipation the central bank will present a more hawkishstatement at its next meeting and perhaps hint that interest rates will risesooner than previously expected.

Today the U.S. Federal Reserve will issue its policystatement. Expect the Fed to leave interest rates unchanged for a prolongedperiod of time. Furthermore, expect the Fed to say that employment is still amajor concern and that inflation remains subdued.

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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