Wednesday October 27, 2010 - 19:15:38 GMT
Share This Story
Forex Hound - www.forexhound.com
U.S. Dollar Index Poised to Change Trend
A story circulating in the Wall Street
Journal is the catalyst behind today‚Äôs rally in the Greenback. In the article, the WSJ suggested the Fed
‚Äúmay opt for a more measured dose of QE this time around rather than the
shock-and-awe version which characterized QE1‚ÄĚ.
Traders are paring long positions against
the Greenback as they seem to believe that the Fed is giving in to some G20
criticism regarding their aggressively expansionary monetary policy. A few G20
members believe that the Fed‚Äôs aggressive spending has been driving up assets
in the past, but that today‚Äôs global economic conditions warrant a more
conservative approach to stimulating the economy.
The article goes on to further state that
the Fed is likely to purchase a few hundred billion dollars of Treasury Bonds
rather that the previous estimate of $1 trillion. This speculation is leading investors who
aggressively shorted the Dollar to lighten up on their positions, triggering a
short-covering rally in the Greenback.
Technically the Dollar Index is poised to
take out the last swing top on the daily chart at 79.18. A move through this
level will turn the main trend to up. Initial gains could be limited because
the nearest resistance is a 50% level at 79.58, but once this level is
overcome, look for an extension of the rally to 80.46.
In other markets, the AUD USD has formed a
secondary lower top, putting this pair in a position to change the trend to
down on a move through the last swing bottom at .9661. Further supporting this
assessment is the fact that today‚Äôs sell off has pressured this market through
an uptrending Gann angle at .9670. Currently minor support is being provided by
a short-term Fibonacci level at .9658.
The bigger picture suggests that a change
in trend to down is imminent, putting the Aussie/U.S. Dollar pair in a position
to accelerate to the downside with .9386 a possible target.
Fundamentally, the Australian Dollar
weakened after a report showed that quarterly inflation was slightly
weaker-than-expected. This news dampened expectations that the Reserve Central
Bank of Australia
would raise interest rates at its next meeting on November 2.
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
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."