U.S. Dollar Trading Mixed; Euro Settling into Range

The U.S. Dollar is trading mixed against most majorcurrencies ahead of the U.S.three-day week-end. The Dollar was under pressure early in the session afterthe Euro and British Pound surged in continuation of Thursday’s big rally.Since then it has settle into a range versus both currencies. 

The U.S. Dollar is trading mixed against most majorcurrencies ahead of the U.S.three-day week-end. The Dollar was under pressure early in the session afterthe Euro and British Pound surged in continuation of Thursday’s big rally.Since then it has settle into a range versus both currencies. Firm equitymarkets are helping the Dollar/Yen post a modest gain. Greater demand for riskhas the Dollar trading lower versus the Canadian and New Zealand Dollars whileslightly lower against the Australian Dollar.

News that Chinadenied it was reviewing its holdings of Euro sovereign bonds helped to reversea sell-off in the Euro on Thursday. The Euro was also helped by China’sreaffirmation of its long-term strategy of diversifying currency holdings awayfrom the Dollar.

The Euro was also buoyed by the news that Spain’sminority Socialist government won parliamentary backing yesterday for itsausterity program by a single vote. Spaincontinues to push toward cutting its budget deficit in an effort to regainmarket confidence weakened by the Euro Zone debt crisis that spread from Greece.

Although the main trend remains down until the EUR USDcrosses the last swing top at 1.2671, the chart pattern suggests further upsideis likely today if the market can establish support inside a retracement zoneat 1.2407 to 1.2345. The downtrending Gann angle at 1.2542 is the only obstaclestopping the Euro from reaching the retracement zone today.

The GBP USD is trading slightly lower this morning after aslight rise overnight. The current chart pattern suggests that a rally to1.4810 is likely over the near-term. Investors have been regaining confidencein the British Pound following moves by the new government to approve austeritymeasures designed to balance the budget and cut government debt.

Stronger equity markets could help drive the USD JPY higher.Increased appetite for risk is likely to drive up demand for the carry tradewhich should keep the pressure on the Japanese Yen. The charts indicate that91.61 is the next likely upside target.

Higher crude oil and stocks are helping to pressure the USDCAD. Technically the Dollar/CAD broke through a 50% price level at 1.0481overnight, setting up a potential break to the next price target at1.0394. The Bank of Canada is set tomeet on June 1. Speculators are looking for the BoC to hike its benchmarkinterest rate.

Easing tensions in the Euro Zone are helping to drive updemand for higher yielding currencies to the benefit of the AUD USD and NZDUSD. The chart pattern suggests the Aussie is on path for a test of .8727 overthe near-term. Upside momentum should take the Kiwi to at least .6942.

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

Disclainer: