Flight-to-Safety Driving Dollar, Yen Higher; U.K. Lowers Growth

The U.S. Dollar is trading sharply lower against most majorcurrencies with the exception of the Japanese Yen. Investor sentiment hasshifted away from risk leading to weakness in the commodity-linked currencies.A reduction in the outlook for U.K. GDP is leading to a huge sell-off in theBritish Pound.

The U.S. Dollar is trading sharply lower against most majorcurrencies with the exception of the Japanese Yen. Investor sentiment hasshifted away from risk leading to weakness in the commodity-linked currencies.A reduction in the outlook for U.K. GDP is leading to a huge sell-off in theBritish Pound.

Technically, the Euro main trend is down on the daily chart.Downside momentum is building which is expected to drive this market into an uptrendingGann angle at 1.2816. Ultimately this market is likely to retrace 50% of itsrecent range to 1.2605.

The main trend is also down in the British Pound. There isminor support at 1.5635. Watch for a technical bounce following a test of thislevel. The next major downside target is an uptrending Gann angle at 1.5429.

The flight to safety is boosting the Japanese Yen. Thismarket is expected to continue to soar as traders take money from higher riskassets and payback borrowed Yen. Unless the Japanese government actuallyintervenes, look for more upside. There may be a technical reversal if there isa verbal intervention but this type of action doesn’t work for a very longtime.

The Fed set the tone for today’s selling of higher riskassets. Despite efforts to ease into a period of loosening, the Fed may haveactually increased the pessimism in the market. The U.S.is a leading economy so the thinking is that if the U.S. economy is cooling off, thenit’s just a matter of time before this weakness spreads globally.

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: