USD Technical Forex Analysis for Daily Traders
The USD continued to decline today despite good indications that near-term technical levels would hold surprising traders with the speed of the move. All the major pairs fell through key support levels for the second day after traders chose to sell the Greenback with both hands after yesterday's larger than expected interest rate cut by the FOMC . A larger than expected production cut by the OPEC members failed to inspire Crude Oil to rally lending support to the argument that energy prices will decline further lending some support for an economic recovery but analysts remind that is a minor issue against the size of the economic crisis; most likely the interest rate cut putting the USD as the worlds cheapest currency will outweigh a rise or drop in commodities prices.
For the most part the USD fell to two-month lows or more against the majors today and more losses are expected as traders adjust to zero-cost of money and how that will fuel growth and inflation. GBP high print overnight at 1.5725 went unchallenged in New York today as the rate struggled to follow EURO higher; low prints at 1.5243 making for nearly a 500 point range on the day. EURO rallied again blowing through expected resistance areas for a high print at 1.4438 almost matching the range seen in GBP with a low print at 1.3997; the rate has now put on more than 20 full handles between current prices and the lows of October. The volatility is huge and traders remind that stops have been one of the big drivers the past two days suggesting that shorts have been effectively eliminated from the markets. USD/JPY failed to hold the previous lows at 88.10 area for a low print at 87.12 finding stops in size under the previous lows; traders note that official interest on the bid was seen as well as the unusual step of the BOJ checking rates. Some analysts suggest that a possible coordinated intervention to stop the Yen's rise could be in the works but I would find that highly unlikely as the BOJ hasn't intervened since 2004 and conditions are worse now for them.
USD/CHF smashed support for a low print at 1.0745 and closes within 20 pips of the low suggesting that money is going into Gold; gold prices were sharply higher in Gold as well today. Traders note that lows today in Swissy are nowhere near support levels that were expected to offer a bounce and with the speed of the move no one is willing to get on the buy side just yet; prices could be much lower to end the year. USD/CAD low prints at 1.1930 were no surprise but the rate has lagged the speed of the decline seen elsewhere suggesting that the rate may behave more rationally near-term. In my view, panic was the rule today and traders will likely come to their senses by the end of the year. The USD is now getting back to more realistic price levels given the conditions of the economy; a return to lower prices for the USD is coming but it needs to be organized a bit better. I think the panic needs to subside and then more reasonable two-way action will result.
Today's US Dollar Trading
- USD gets clobbered again, drops through support
- Traders in one way panic mode
- Commodities mixed
- Look for more follow-on selling of USD
- Should get quiet ahead of US news tomorrow
Looking Ahead to Thursday
All times EASTERN (-5 GMT)
- 8:30am USD Unemployment Claims
- 10:00am USD Philly Fed Manufacturing Index
- 10:00am USD CB Leading Index m/m
- 10:35am USD Natural Gas Storage
- 1:30pm USD FOMC Member Fisher Speaks
Forex Analysis by Jason Alan Jankovsky at ForexPros.com. For more details about Forex Trading and Tips for decent earnings through Forex Trading, Please check http://www.forexpros.com