Thursday November 18, 2010 - 18:37:28 GMT
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Dollar Falls against Most Majors; Risk appears to be Back On
The U.S. Dollar fell against
most major currencies in overnight trading as investor appetite for risk
increased while tensions over Irish debt issues eased. Pressure increased on
the Dollar amid optimism that a bailout for Ireland will prevent contagion
across the Euro regionâ€™s debt markets.
Talk is circulating that Ireland will
ask for a â€śsubstantialâ€ť bailout from the European Union and International
Monetary Fund. This helped strengthen the Euro as well as global equity
markets. Commodity currencies also rose amid strong demand for risky assets.
Rumors, that a support
package is in place has definitely led to a calmer trade overnight. Risk
sentiment is improving as traders pare short positions in the Euro and the risk
currencies â€“ Australian Dollar, New Zealand Dollar and Canadian Dollar.
It looks as if
short-covering is helping the Euro to recover following a lengthy break from
the top at 1.4282. Earlier this week, the EUR USD stopped its break at 50% of the 1.2587
to 1.4282 range at 1.3434.
Expectations are for the
Euro to begin to mount a major rally against the Dollar as nervous conditions
abate in the Euro Zone over Irish debt issues. Based on the near-term range of
1.4282 to 1.3446, look for a possible rally to 1.3864 to 1.3963.
Gann angle resistance comes in at 1.3882. This makes 1.3864 to 1.3882 a
resistance cluster. Although it is highly unlikely that this cluster will be
reached today, it does highlight how much room is available to the upside.
After a sharp sell-off
earlier in the week, the AUD USD has rebounded and is now in a position to
retrace at least 50% of the recent break from the all-time high.
Technically, the Aussieâ€™s
short-term range is 1.0182 to .9724. This makes .9953 to 1.0007 the next
potential upside target. A downtrending Gann angle comes in at 1.0002, making
1.0002 to 1.0007 a key resistance cluster and likely near-term upside target.
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