Monday January 4, 2010 - 19:46:10 GMT
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Forex Hound - www.forexhound.com
Friendly U.S. Manufacturing Data Weakens Dollar
A friendly U.S.
Manufacturing report is helping to weaken the Dollar at the mid-session
by driving up demand for higher yielding assets.
opened the first trading session slightly better but a strong surge in
U.K. and China manufacturing data helped to pressure the Dollar
overnight. These two better than expected reports triggered renewed
interest in demand for higher risk assets.
The daily chart
pattern in the EUR USD suggests the first upside objective over the
short-term remains 1.4680 to 1.4790. Whether traders go after this
level will be determined by a slew of U.S. economic reports this week
especially the employment report on January 8th.
The GBP USD
followed through to the upside after last weekâ€™s late turnaround, but
is failing to attract fresh buying at the mid-session because of
short-term overbought conditions. The daily chart indicates that this
market has room to the upside with 1.6355 to 1.6478 the next objective.
The USD JPY is trading weaker after a steady to higher opening.
The current chart pattern suggests a possible closing price reversal
top formation. Traders feel the market has advanced enough and are
reacting to overbought technical factors. In addition, renewed demand
for higher yielding assets is helping to pressure the Dollar. The chart
indicates a break to the old top at 92.32 is likely over the short-run.
The USD CHF rallied over night but ran into technical pressure
at a .618 level at 1.0419. Renewed interest in higher risk assets could
send this currency pair back to 1.0212 to 1.0143 over the near-term.
Watch for a possible technical bounce on the first test of this level.
a slight retracement late last week, the USD CAD is once again under
pressure. The main trend is down. The chart indicates developing
selling pressure is likely to accelerate under an old main bottom at
1.0405, setting up a further decline to 1.0265. Strong rallies in gold
and crude oil as well as equity markets are the driving forces behind
todayâ€™s weakness in the USD CAD.
The AUD USD started the
session steady to better, but surged to the upside following a pick-up
in demand for higher risk assets. The strong rise in U.S. equity
markets is helping to create demand for the higher yielding Aussie.
Technical factors are also signaling new strength as this market has
broken through a pair of retracement levels at .8964 to .9018.
Continuing strength could drive this market to .9144 over the near-term.
New Zealand Dollar overcame initial weakness with a quick turnaround
last night on the news of the improvement in Chinese manufacturing.
Strong upside momentum fueled by greater demand for higher yielding
assets has put the NZD USD in a strong position to test Gann angle
resistance at 73.30. Solid support has been established at .7185.
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