Greenback Hammered after G-20 Offers No Support

The U.S. Dollar is trading sharply lower against all major currencies after the Group of 20 finance ministers and central bankers over the weekend failed to come up with any plan to shore up the Greenback.

The U.S. Dollar is trading sharply lower against all major currencies after the Group of 20 finance ministers and central bankers over the weekend failed to come up with any plan to shore up the Greenback.

The U.S. Dollar’s downtrend is likely to continue after the G-20’s joint committee warned of the need to move toward more “market-determined” currency exchange rates. This basically means no interference from the central banks. This same committee also said that a global economic recovery is underway but uneven. By allowing letting the market determine the Dollar’s value, the G-20 is saying the stronger currencies will prevail.

The USD JPY continued its slide, reaching a fresh 15-year low. This pair is rapidly approaching its 79.70 low hit during the second quarter of 1995. The rise in the Yen is also putting a hurt on Japanese companies and the economy.

The EUR USD resumed its rally. Although the daily main trend indicator is still down, upside momentum is building which may mean another test of the last main top at 1.3884.

After forming a support base at a major 50% level at 1.5701, the GBP USD is mounting a small rally. Expectations are for this pair to rally back to a downtrending Gann angle at 1.5866. If upside momentum is strong enough, this market may reach a 50% level at 1.5878. This could be another selling opportunity as traders still feel the Bank of England will implement another round of quantitative easing because of the weakening economy.

After a strong short-covering rally drove the Dollar/CAD into a major 50% level, it looks as if this market is set to resume its downtrend. This morning this pair is testing a retracement zone at 1.0176 to 1.0129. Once this area is cleared, look for a test of an uptrending Gann angle at 1.0119.

Although the Bank of Canada refrained from hiking its benchmark interest rate earlier in the month while warning of an economic slowdown, the U.S. Dollar is just too weak to ignore, thereby setting up the USD CAD for another test of parity over the short-run.

After an early response to the G-20 announcement, traders will be given a chance to react to this morning’s U.S. existing Home Sales. Early guesses are for this report to show a rise of 6.3% to 4.39 million. This is versus last month’s rise of 7.7%.

It’s still too early for traders to shut down in anticipation of the U.S. Federal Reserve Open Market Committee announcement on November 3.

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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