Dollar surges ahead against all currencies

Greenback growth continues

Today, the Dollar strengthened across the board, hitting an 11 month high to the Yen.

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On Wednesday, the Dollar reached an 11-month high to the Yen and a 1-month high on the Euro.

The Federal Reserve’s economic forecasts resulted in traders downplaying expectations of further monetary easing.

The greenback had hit a session high at 83.32 Yen, which was its highest level since mid-April.

A few other factors contributed to this. The U.S. 2-year Treasury yields have, for example, touched a 7 and a half month high after solid retail sales data, which made the Dollar less attractive as a funding currency for carry trades. It seems that Tokyo exporters were also reluctant to sell it as they expect more strength in the short term.

The recent easing steps by the Bank of Japan, the country’s trading deficit and strong demand for fossil fuels after the recent nuclear crisis, have also contributed to the Dollar rising nearly 10% on the Yen from early February.

The greenback has also gained against other currencies, with its index hitting a 7 and a half week high of 80.42.

After Friday’s encouraging U.S. jobs report, new evidence of improvement in the U.S economy was shown with a strong 1.1 percent rise in retail sales.

It’s for these reasons also, that the Fed slightly upgraded its outlook, with the expectation of “moderate” growth over coming quarters and a gradual decline in the unemployment rate.

The Fed’s annual stress test had also showed that the majority of the largest U.S. banks passed.

2012 had begun with a very low starting point of expectations for U.S. growth and forward rates.

Up to now, investors have tended to sell the Dollar to buy higher-yielding assets on any upside surprise in key U.S. data. However, strong data is seen as delaying the odds of more action from the Fed which, in turn is positive for the Dollar.

The inverse relationship between the Dollar and equity markets has all but broken down and analysts expect this can persist.

The Dollar’s gains have undermined the Euro, which hit a one-month low of $1.3034 earlier today.

The Aussie also fell against the greenback and earlier was down 0.3 percent at $1.0505, edging closer to the seven-week low of $1.0473.

Later today, Euro zone industrial production for January and inflation data for February are due.

All the best!
Adrian Jones

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EXOTIC TRADING

Yen Drops, Dollar Strengthens Across The Board

The Japanese Yen dropped as the US Dollar reached an 11-month High after Federal Reserve economic forecasts revealed no further monetary easing.

Meanwhile, in Europe, Germany’s ZEW survey data leaped to its highest level since June 2010, a move which is prompting many economists to believe that Europe’s largest economy has recovered from a weak patch.

News Watch For EURJPY

There are no High Impact news releases scheduled for the EURJPY pair through until the close of trading this Friday.

EURJPY Analysis

Price stalled on the EURJPY in a range for a while but as I write, it looks like this pair has just taken off. Take a look at the following chart:


As you can see, price got stuck in a range but it has since burst out of the range and crossed above the 109.000 level.

Should this candle close above this level we can be sure to get a signal to enter to the long side. The 109.800 level would serve nicely as a long term target.

Should price fail to close above 109.000, we may see an entry to the short side present itself if price falls below the black dashed trendline.

Remember, Regular Bearish Divergence is still in play and it could prompt a sell off so proceed with caution and wait for confirmation!

All the best!

Happy trading
Wesley Govender

Senior Trader for
World Class Trading Stars

~~~~~

Not much going on today as far as a signal is concerned for the Cable. We did reach our trend line target early this morning which was about 80 pips worth so not too bad. We are in a downwards channel so we may see the market roll over a bit. As I said though my system hasn’t given any clear signals one way or the other just yet.


For news today we’ve got Usd news all morning. At 8:30am EST we have the Current Account and Import Prices which are both medium impact. At 10:00am EST Chairman Bernanke speaks which is high impact and at 10:30am EST we have Crude Oil Inventories, medium impact. Because of the news this morning and because we have no signal today is a great day to stand a side and wait for a clear set up.

Good luck and safe trading!

Joshua Schultz
Senior Trader For
Forex Master Method

~~~~~


Wednesday 14th Mar 12

EUR/USD

4 hour chart

Weekly Pivot – 1.3170
Monthly Pivot – 1.3261

Resistance – 1.3190
Resistance – 1.3291
Support – 1.3030
Support – 1.2973

Yesterday tactic of holding the short taken at 1.3159, or initiating news shorts at 1.3078 seems to have played out correctly, albeit slowly, which can sometimes be a warning sign.

The target still remains at 1.2973, but as we are now developing bullish divergence on stochastic, we might see a bit of a pull back before the next push down.

Hold short position for time being and keep target at 1.2973. Possible trades are either to enter at market, or wait for a pull back to the 50% Fib retracement of 1.3160, with a stop above resistance at 1.3190 and a target of 1.2973.

Mark McRae

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