Dollar stalled near one-week low, Aussie under pressure

Dollar dips while economic outlook is on the rise

Earlier today, the Dollar moved near a 1 week low against a basket of currencies. Recent signs though, of improvement in the American economy and rising Treasury yields, are likely to lend the greenback some support.

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Early Tuesday the Dollar index regained some ground, having dipped to 79.354 on Monday, it was marginally higher at 79.533.

Many analysts don’t predict that the Dollar will pull back significantly, expecting rather that the coming days will see consolidation for the Dollar.

The Euro was 0.1 percent off a 1 week high of $1.3266 hit on Monday, at $1.3231.

On Monday, the European Central Bank (ECB) had said it did not purchase any bonds under its bond buying programme last week, and the market interpreted the news as an indication that that bond markets in the Euro zone have been recovering to an extent on their own, without ECB support.

There have been some signs of stabilization in the Euro zone’s bond markets this year, notwithstanding the fact that traders remain alert to the risk that the Euro zone’s sovereign debt crisis could flare up again, and that Portugal may eventually need to restructure its debt similar to how Greece has done recently.

Market players regard the Euro as being vulnerable against the Dollar because of the diverging outlooks for the U.S. and Euro zone economies in the near-term.

Today, moves in the Dollar/Yen have been subdued with Japanese financial markets closed for a national holiday.

The Dollar had earlier inched up 0.1 percent to 83.43 Yen, having rallied to reach an 11 month high of 84.187 Yen on Thursday.

The Yen has of late been under broad pressure after the Bank of Japan’s surprise monetary easing in mid-February.

It seems that traders may now be looking to take their gains or get out of their positions, rather than putting on new bets to long the Dollar.

The Dollar though looks likely to be supported against the Yen as long as future U.S. economic data doesn’t disappoint.

The recent improvement in U.S. economic data together with a modest improvement of the U.S. Federal Reserve’s economic outlook, helped spur a rise in U.S. Treasury yields, with 10-year U.S. Treasury yield rising as high as 2.392% on Monday, its highest level since October 2011.

The two-year Treasury yield were traded at roughly 0.38%, not off from last week’s high of 0.414%, which was its highest level since late July.

Gains in the Dollar against the Euro remain subdued ahead of Federal Reserve Chairman Ben Bernanke giving the first of four lectures at George Washington University today, and ahead of him testifying before a U.S. House committee about Europe’s debt crisis on Wednesday March 21st.

Elsewhere, comments from global miner BHP Billiton and Rio Tinto about a slowdown in China, hurt commodity currencies led by the Australian Dollar.

The Aussie came under pressure following BHP declaring that it saw signs that growth in iron ore demand was flattening in China. China is Australia’s single biggest export market. As a result the Aussie fell 0.4% to $1.0568.

All the best!
Adrian Jones

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Euro Squeezed Higher While The Yen Takes A Break

The Euro soared on Monday after the European Central Bank (ECB) stated that it had not bought any bonds, a move which led the market to believe the Euro Zone is currently in a state of recovery.

Meanwhile, the Japanese Yen is likely to show very little volatility as the Japanese financial markets are closed today due to a national holiday.

News Watch For EURJPY

There are no High Impact news releases scheduled for the EURJPY pair today but look out for news and reaction out of the Euro Zone.

EURJPY Analysis

The EURJPY pair continued in an upward direction as the pair found support at the lower bullish channel trendline yesterday. Take a look at the chart below:


As you can see, we did not get a very strong close below the lower bullish channel trendline. There was no supporting evidence from my indicators suggesting price would continue down, so I decided to look for a conservative entry below the low of the breakout candle.

Price never reached this level so we managed to side- step a trade in the wrong direction. As you can see, price eventually reversed and the bullish trend continues.

Right now, I have no signals for potential entries as my indicators are flattening out. This could be the calm before the storm, so I still have my eye on my charts and will be looking for a good signal to get in and hopefully share that with you soon.

All the best for the week ahead!

Wesley Govender
Senior Trader for
World Class Trading Stars

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We finally saw a bit of that pullback we were expecting from yesterday early this morning and price actually came back up and flirted with the monthly trend line again. I don’t see too much of a signal except for being close to this area. I’d like to see price fall off a bit and create some hidden bullish divergence and then move back up. There’s nothing yet however on the 4h chart.


On the daily chart there isn’t much going on either. In the news today we’ve got a bunch of releases for the Usd. At 8:30am we have Building Permits – high impact, 8:30am Housing Starts – medium impact, 10:00am Treasury Sec Geithner Speaks – medium impact, 12:45pm Fed Chairman Bernanke Speaks – medium impact.

Today is a fair day to stand aside and let the market create and opportunity we can get in on.

Have a great day!

Josh
Senior Trader For
Forex Master Method

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Tuesday 20th Mar 12

EUR/USD

4 hour chart

Weekly Pivot – 1.3123
Monthly Pivot – 1.3261

Resistance – 1.3291
Resistance – 1.3321
Support – 1.3125
Support – 1.3000
Support – 1.2973
Support – 1.2929

Current Price 1.3180

Price pulled back to the monthly pivot point of 1.3261 and j ust above the 50% Fib retracement of 1.3243. Not quite confluence, but just having both the monthly pivot and 50% retracement in the same area helps form an opinion.

I think the best position right now is to be flat. I still have a downside preference because we are below the monthly pivot, but as we have the weekly pivot point at 1.3122, which coincides with support at 1.3125, I see that as an important level.

A possible trade is to wait for a break of support at 1.3125 with a target 1.3000 and stop above 1.3125.

I’m still not interested in long trades at the moment.

Mark McRae

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