Dollar Index Finishes Week Lower

The U.S. Dollar Index finished the week lower after failingto confirm last week’s potentially bullish closing price reversal bottom.

The U.S. Dollar Index finished the week lower after failingto confirm last week’s potentially bullish closing price reversal bottom.

Clearly, both the daily and weekly chart patterns indicatethis market can accelerate to the upside if the daily swing top at 78.61 istaken out to the upside. This move is likely to trigger a short-term rally to a50% retracement level at 79.58.

The strength and direction of the Greenback will bedetermined next week by how much the Fed allocates to quantitative easing.

Since August, the Dollar has been crushed as tradersspeculated the Fed would purchase up to $1 trillion of quantitative easing.

Earlier this week, the Dollar rallied when a Wall StreetJournal article said the Fed would probably pump $250 billion into the economy.

$1 trillion is the upper end of the range and $250 billionis the lower end in my opinion. Anything in between probably means a resumptionof the Dollar’s downtrend, but without much fanfare. A figure of $1 trillion ormore will be extremely bearish for the Dollar. $250 billion or less will bebullish for the Dollar.

Although it seems everyone has been talking about QE2, it ispossible that the Fed may surprise by cutting the interest rate it pays ondeposits by member banks. Once again, putting liquidity into the market is notgoing to be good for the Dollar.

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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