Friday May 28, 2010 - 18:26:02 GMT
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Forex Hound - www.forexhound.com
U.S. Dollar Wavering in Thin Holiday Trade
The U.S. Dollar is trading higher at the mid-session after
wavering for most of the morning. Thin holiday trading is the reason behind
investor indecision today. Thursdayâ€™s action was most likely the day large traders
squared up positions for the month, leaving today open for smaller traders.
The EUR USD is trading flat to better at the mid-session. So
far the majority of the price action during the day-session has been contained
inside a retracement zone at 1.2345 to 1.2407. It needs to build a support base
inside this zone in order to continue on to its short-term objective of 1.2742.
The main trend remains down in the GBP USD but the market is
beginning to show signs of a bottom. The short-term range is 1.4229 to 1.4610.
This creates a retracement zone at 1.4419 to 1.4374. Watch for a near-term
pull-back into this zone. If this market is going to move higher then it must
build a secondary higher bottom at or near this zone. The daily chart indicates
that this market has the potential to rally back to 1.4810, but a new higher
bottom has to be formed to solidify the developing pattern. Traders have been a
little more optimistic about the British Pound because of easing tensions in
the Euro Zone and the positive steps to shore up the U.K. economy by the new government.
The daily main trend is up in the USD CHF, but the closing
price reversal at 1.1695 from earlier in the week indicates that a major top
may be forming. The current chart formation suggests that this market has room
to the downside with 1.1309 the next likely downside target.
The weaker stock market is applying pressure to the USD JPY.
Traders seem to be taking a little more protection in the lower yielding Yen
ahead of the three-day week-end. This morning the Dollar/Yen failed to reach
its main upside objective of 91.61 before sellers arrived.
The USD CAD is posting a modest gain at the mid-session
after breaking into a retracement zone at 1.0481 to 1.0394. The main trend is
up but the market is showing signs of topping. There may be one more rally to
1.0648 to 1.0696 before new selling pressure surfaces. Demand for higher risk
assets will push this market lower along with a possible hike in interest rates
on June 1st by the Bank of Canada.
The AUD USD is trading lower. Profit-taking is setting in
after the strong rally this week. Increased appetite for risk will rally the
Aussie over the near-term. The next upside target is a 50% price at .8727.
Traders should watch for buyers to step in if this market breaks back to .8308
to .8251. This market may be turning higher but needs to solidify the pattern
by forming a secondary higher bottom in this price zone.
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