The U.S. Dollar finished lower against a basket of
currencies under thin, pre-holiday trading conditions.Todayâ€™s weakness could have been worse had it
not been for better than expected initial claims and durable goods.Both reports signaled an improving economy.
Although it is difficult to gauge the actual reasons behind
the weakness, itâ€™s easy to speculate that the huge run-up in the Dollar the
past few weeks is making it ripe for profit-taking.
The most important thing that traders should take away from
these markets this week is that sentiment is shifting away from risk-based
decision making to more fundamentally driven decision making.The rally on Tuesday, Wednesdayâ€™s weakness and
todayâ€™s action are prime examples.For
example, traders drove up the Dollar on good existing home sales news on
Tuesday while driving it lower on poor new home sales on Wednesday.Thursdayâ€™s reports helped stop a possible
Moving forward into the new year, it is important to note
that volatility is likely to rise in the short-run as speculators and investors
adjust to a new way to make trading decisions.
The EUR USD finished a little better.The chart pattern suggests a possible weekly
reversal up.In addition, this currency
pair could complete a 50% retracement to 1.4680 before new sellers step
in.Debt issues in Greece, Spain
could rear up at anytime which could trigger fresh selling pressure.
Bearish pressure continued to push the GBP USD lower, but
short-term traders should watch for a possible retracement before fresh selling
pressure begins.The slow growth in the
economy and the U.K.
budget deficit remain the biggest reasons for the weakness.
Profit-taking after a huge run-up the past five days helped
to pressure the USD JPY, but better than expected economic news limited losses.Attractive yields and improving economic
conditions should continue to help the Dollar rise versus the Yen after the
holiday.Look for bullish traders to
re-enter the long side after prices retrace slightly.Upside momentum should then take this market
to the October high at 92.32.
Overbought conditions and end-of-the-year profit-taking helped
to pressure the USD CHF this week.Following a huge surge to 1.0507, this currency pair has now retraced
back to the old main top at 1.0337.In
addition, uptrending Gann angle support is underpinning the market at
1.0318.The technical bounce to the
upside following a test of this level this morning proved its importance. A
failure to hold this angle could trigger further weakness.
The USD CAD continued to erode support overnight but buyers
came in when this currency pair hit the lower end of the retracement zone at
1.0459. A technical bounce could drive this market back to 1.0537 to 1.0598. Investors
have been repositioning themselves in anticipation of an improving Canadian
economy.Traders feel that an improving U.S. economy
will help better the Canadian economy at a faster pace than previously
estimated.After testing the upper-band
of a wide trading range at 1.0601 on December 17th, this currency pair is now
testing the lower end at 1.0459.The
most important price to watch is 1.0405.Speculators have also been pricing in the possibility of an interest rate
hike more sooner than expected.
Wednesdayâ€™s daily closing price reversal bottom in the AUD
USD was confirmed by the overnight rally.This action is taking place on a major 50% price level at .8780.This type of pattern suggests a minimum 50%
retracement back to .8964 is likely over the short-run. Thursdayâ€™s rally is
likely profit-taking and position evening ahead of the new year.With risk sentiment changing, look for
selling pressure to resume after the short-term retracement.
A similar situation is developing in the NZD USD.Traders are taking profits under thin trading
conditions following a sharp sell-off.The pre-hawkish central bank bottom at .7043 was broken a few days ago,
this action puts a bearish spin on the market, but selling pressure is not
likely to resume until after the holidays. Look for a possible retracement to
.7144 before the selling pressure resumes.
Forex Trading News
Daily Forex Market News Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
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Forex News Real-time forex market news reports and features providing
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