Tuesday October 26, 2010 - 04:12:52 GMT
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Forex Hound - www.forexhound.com
Stocks Rally then Falter; Investors Still Reluctant to Chase Higher.
The weaker Dollar led to an early surge in equity markets,
but the rally fizzled as U.S.
investors still remained reluctant to chase this market higher. The current
rally looks labored and vulnerable to a break, but investors have been
supportive on the dips.
Look for this pattern to continue as long as the Fedâ€™s
quantitative easing plan is still on the table. Traders may begin to pare
positions ahead of the November 2 and 3 Federal Open Market Committee meeting,
but no one is certain when that type of positioning is going to take place.
This means we could be looking at a few days of sideways action.
The U.S. Dollar lost ground overnight in reaction to the
news that the G-20 couldnâ€™t offer any support to the ailing Greenback. After an
initial thrust to the downside, profit-taking was able to drive the Dollar off
Todayâ€™s action indicates that while the Dollar is still
weak, it may just sit in a range versus the major currencies until the Federal
Open Market Committeeâ€™s statement on November 3.
Although traders expect the Fed to formally announce plans
for a new round of quantitative easing, traders are still not sure how much and
how it will distribute the money. Since Fed Chairman Bernanke confused traders
in a speech a little over a week ago, traders have been tentative about taking
aggressive long positions against the Dollar. The only exception to this
statement is the Japanese Yen.
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