Sentiment Shift to Risk Pressuring Dollar

The Dollar is getting hit hard thismorning as trader sentiment has shifted back toward risk, forcing bullishtraders to unwind flight-to-safety positions initiated late last week.

The Dollar is getting hit hard thismorning as trader sentiment has shifted back toward risk, forcing bullishtraders to unwind flight-to-safety positions initiated late last week.

In overnight news, the AustralianDollar rose against the U.S. Dollar after the Australian central bank kept itskey cash rate on hold at 4.75%. The Aussie is rallying on the thought thatinterest rates will remain firm until the end of the year.

Technically, the Australian Dollarsurged to the upside following the release of the Reserve Bank of Australiadecision. Currently the market is testing a swing top at 1.0076 and a Fibonacciretracement level at 1.0083. Building upside momentum could trigger a breakoutover these levels.

The Euro soared overnight, takingout the last swing top at 1.3758 and a Fib retracement level at 1.3744.Momentum has slowed, but there doesn’t appear to be any threat to theuptrend. A new swing bottom has beenformed at 1.3570. A trade through this level will turn the main trend to down.

Demand for higher risk assets isdriving this market higher. There are also rumors circulating that the EuropeanFinancial Stability Facility may by distressed government debt in privateplacements.

The British Pound broke out to theupside after consolidating for the past 10 days. Speculators are betting thatthe Bank of England will raise interest rates later this year.

Risk sentiment has shifted sincelate last week despite continued unrest in Egypt. Should the situation turnviolent then investors are likely to shift their money back into the loweryielding U.S. Dollar and Japanese Yen.

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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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