Dollar Extending Losses Against Most Majors

The flight to safety rally into theU.S. Dollar fizzled overnight, putting downside pressure on the Greenback.Continued unrest in Egypthas been sending investors scurrying into the safe-haven appeal of lower-yieldingcurrencies, but it looks like this morning that the Japanese Yen is thecurrency of choice.

The flight to safety rally into theU.S. Dollar fizzled overnight, putting downside pressure on the Greenback.Continued unrest in Egypthas been sending investors scurrying into the safe-haven appeal of lower-yieldingcurrencies, but it looks like this morning that the Japanese Yen is thecurrency of choice.

Volatility could be the theme thisweek in the foreign currency markets. Not only will the political turbulence inEgyptbe on the forefront, but traders will also have to deal with Euro Zoneinflation data, a European Central Bank meeting and the U.S. Non-Farm Payrollsdata.

The Dollar opened this week’ssession higher, but a follow-through rally failed to materialize. Money flowsinto the Japanese Yen for safety increased, but the Dollar was also tradinglower against most major currencies at the New York opening.

Earlier this morning the U.S.reported consumer spending in December rose 0.7% while incomes rose 0.4%. Afterthe report, the Dollar extended its losses.

Technically, the Euro found supportat a major 50% price level at 1.3577. The sharp turnaround and developingupside momentum suggests that last week’s swing top at 1.3758 is likely to betaken out by aggressive buyers. Not only will this move signal the resumptionof the uptrend, but it will also mean a potential new wave of buying may hitthe market as sentiment is shifting more toward a faster economic recovery inEurope than in the U.S. Investors will be looking for comments fromthe European Central Bank this week hinting that improvements in the Euro Zoneare bringing it closer to raising interest rates.

Pressure is likely to remain on theDollar as unemployment and the budget deficit continue to weigh on thegreenback. There is a perception building in the global community that thefailure of the U.S.to shore up its economy could lead to a confidence crisis sooner than expected.Last week Moody’s hinted that it may have to downgrade the U.S. debt rating if a solutionisn’t reached soon regarding the growing budget deficit. This news is alsopressuring the Dollar.

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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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