Reply #12: dollar watch [View All]

[UpInArms]

http://quotes.ino.com/chart/?s=NYBOT_DX&v=i

Last trade 85.14 Change +0.16 (+0.19%)

Dollar Tug of War

http://www.dailyfx.com/story/strategy_pieces/trade_or_fade/Dollar_Tug_of_War_1170672722503.html

US economic news on was mixed throughout the week and dollar slowly lost ground to the euro only to recapture most of its losses on Friday afternoon. Dollar’s gain however was not due to a strong NFP number (that report like much of the week’s news was mixed as well) but rather from the rumor from MNI news service which reported on good authority that the ECB would pause for a substantial amount of time after hiking rates one more time in March to 3.75%. Needless to say for a market so focused on interest rate differential compression between the euro and the dollar this was a massive shift in psychology and the pair plummeted nearly 100 points in a matter of minutes.

The message from the US front was that the Fed would stay pat on rates for the foreseeable future, neither hiking nor lowering them. GDP produced a surprise to the upside registering a gain of 3.5% vs. 3.0% expected but the positive news was somewhat offset by the drop in ISM manufacturing below the 50 boom/bust level. Conversely, the disappointing NFP read of 111K vs. 150K expected was alleviated by a large revision upward in the month prior. In short, the US economy appears to be growing at a slow steady pace confirming the “not too hot, not too cold “ goldilocks thesis.

While such a confluence of events may be dear to central bankers heart, it unfortunately makes for some very dull markets. Next week volatility may indeed subside further given the fact that the US calendar carries very little event risk with only the ISM Non Manufacturing report holding some interest for the market. As the week comes to a close attention will doubt turn to the G-7 meeting, but even that may turn out to be a non event. – BS



...more...

Dollar Strength Will Likely Extend

http://www.dailyfx.com/story/dailyfx_reports/daily_technicals/Dollar_Strength_Will_Likely_Extend_1170680685079.html

EURUSD – It looks like the 5th wave down (in a 5 wave bearish sequence that began at 1.3367) started at 1.3066. We are looking for a low to be made below 1.2865, which would be followed by a rally that will retrace a portion of the decline from 1.3367. Measured objectives are centered near 1.2750. The 61.8% extension of 1.3367-1.2865 / 1.3066 is at 1.2756 and the level where wave 5 would equal wave 1 is at 1.2747. Only a rally above 1.3066 (Friday’s) high negates the near term bearish structure. A decline below 1.2865 satisfies minimum expectations for a 5th wave down.

,snip>

USDJPY – The USDJPY may be tracing out a 3 wave zigzag correction. The decline from 122.21 to 120.10 would be the first of that 3 wave correction (wave A) and the bounce to 121.38 would be the second wave (wave B). A third wave (wave C) decline could extend to 119.26, which is where waves A and C would be equal. 119.26 is also the 38.2% of 114.43-122.21. Price is slipping below the 20 day SMA today, which has held as support since early December. 121.38 needs to hold in this case.

...more...