U.S. Dollar under Pressure; Medley Report Outlines Fed QE Plan

A report from Medley Global Advisorsoutlining the Federal Reserve’s plan to buy $500 billion of Treasury debt oversix months to stimulate the economy is helping to pressure the U.S. Dollar atthe mid-session.

A report from Medley Global Advisorsoutlining the Federal Reserve’s plan to buy $500 billion of Treasury debt oversix months to stimulate the economy is helping to pressure the U.S. Dollar atthe mid-session.

The Greenback began accelerating to thedownside last night after Medley’s confirmed comments made Tuesday by a Fedofficial that $100 billion a month in bond purchases may be appropriate tosustain the U.S.economy’s feeble recovery.

Medley’s report gave traders the greenlight to resume selling the Dollar as it clearly indicated the Fed was gettingready to start pumping money into the economy as soon as November.

Since last Friday, the Dollar hadstrengthened because of short-covering as many traders lifted bearish positionson the thought that perhaps they had over-estimated the size of the Fed’scommitment to its new quantitative easing program.

The Euro is a big gainer at themid-session, boosted by the Medley report as traders entered new long positionsin anticipation of the Fed easing. In addition to the Fed’s new commitment torestoring the strength of the economy, speculators bought the Euro on thethought that the European Central Bank may be getting ready to implement a tightermonetary policy.

Although the Euro is strong at themid-session, gains could be limited because of this week’s G-20 meeting. In addition, some traders still believe theDollar is oversold.

Technically,theEuro changed the main trend to down when it crossed 1.3775 on Tuesday.Short-term oversold conditions prevailed however setting up the possibility ofa 50% correction of the break from the top at 1.4159. This means that 1.3928 to1.3983 is the next potential upside target.

On the downside, overnight the marketpenetrated, but regained a major uptrending Gann angle at 1.3764. If the Eurois topping, then it is likely to fail between 1.3928 to 1.3983 within the next2 to 3 days.

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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