Greenback Continues to Get Pounded; Fed, Treasury Remain Quiet about Weakness

The outlook for the U.S. Dollar continues to remain bleak as traders continue to apply selling pressure in anticipation of additional Fed easing.

The outlook for the U.S. Dollar continues to remain bleak as traders continue to apply selling pressure in anticipation of additional Fed easing.

A key member of the European Central Bank talked up the Euro on Wednesday when he said the ECB should end its asset buyback program. Since this comment came at a time when the Fed is considering more quantitative easing, it exposed the Greenback to more weakness. The Japanese Yen reached a new 15 year high while both the Canadian Dollar and Australian Dollars are rapidly approaching parity with the U.S. Dollar.

Other than exposure to extremely oversold technical indicators, there doesn’t appear to be a reason for the Dollar to post a bottom at this time. Both the Federal Reserve and the Treasury have said or done anything recently to help the Dollar, thereby solidifying their unofficial stance that they prefer a weaker Dollar.

Overnight the Euro took out its recent swing top at 1.4028, reaffirming its solid uptrend. A new higher swing bottom was also formed at 1.3775. A break through this level turns the main trend down on the daily chart.

The Euro weakened a little after this morning reported rise in U.S. Weekly Initial Claims, but this action was most likely profit-taking. Based on the more important Fed news running through the market, the Euro is likely to recover from its early session weakness.

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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