U.S. Dollar Poised to Open Better; Stress Test Concerns Underpinning Greenback

The U.S. Dollar is trading higher against most currencymarkets this morning ahead of the opening in New York. Although the Greenback closedlower on Tuesday, it started to regain earlier losses about mid-session onconcerns about a slow down in global growth, European bank stress tests andshort-term oversold conditions.

The U.S. Dollar is trading higher against most currencymarkets this morning ahead of the opening in New York. Although the Greenback closedlower on Tuesday, it started to regain earlier losses about mid-session onconcerns about a slow down in global growth, European bank stress tests andshort-term oversold conditions.

Recent weakness in U.S.economic reports have been driving up demand for risk, but last night’s rallyappears to have started as traders reassessed the U.S. economy’s impact on continuedglobal growth. Investors are also taking risk off the table after moreinformation about the European bank stress tests was revealed.

European regulators are expected to reveal today how theyintend to test the health of the Euro Region’s banks. The purpose of the testsis to simulate the impact of a severe economic shock to the banking system. Theregulators will be attempting to restore confidence in the markets, but investorsappear to be skeptical about the credibility of the test results. Many feelthat the tests will not be stringent enough. This is raising concerns thismorning which is leading to long position paring and the subsequent selling ofriskier assets.

Currency markets are also feeling pressure this morningespecially the Euro and the commodity-linked markets. Emotions are running highin the markets which could fuel a self-off once the New York currency session opens. Without anymajor U.S.economic reports for guidance, traders may react to the fear developing overthe upcoming bank stress tests. Overnight, the Euro weakened on a smaller thanexpected gain in the Euro Zone GDP and a weaker than expected German factoryorder report.

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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