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Strong U.K., China Manufacturing Data Sinks Dollar

James Hyerczyk from ForexHound.com at 01/04/10


A strong surge in U.K. and China manufacturing data helped to pressure the Dollar overnight.  These two better than expected reports triggered renewed interest in demand for higher risk assets.  Losses are being limited, however, as traders await this morning’s U.S. ISM Manufacturing Index which will be release at 9 a.m. Central Time.


The daily chart pattern in the EUR USD suggests the first upside objective over the short-term remains 1.4680 to 1.4790. Whether traders go after this level will be determined by a slew of U.S. economic reports this week especially the employment report on January 8th.


The GBP USD is following through to the upside after last week’s late turnaround.  The daily chart indicates that this market has room to the upside with 1.6355 to 1.6478 the next objective.


The USD JPY is trading weaker after a steady to higher opening.  Traders feel the market has advanced enough and are reacting to overbought technical factors.  In addition, renewed demand for higher yielding assets is helping to pressure the Dollar.  The chart indicates a break to the old top at 92.32 is likely over the short-run.


The USD CHF rallied over night but ran into technical pressure at a .618 level at 1.0419.  Renewed interest in higher risk assets could send this currency pair back to 1.0212 to 1.0143 over the near-term.


After a slight retracement late last week, the USD CAD is once again under pressure.  The main trend is down. The chart indicates developing selling pressure is likely to accelerate under an old main bottom at 1.0405, setting up a further decline to 1.0265.


The AUD USD started the session steady to better, but surged to the upside following a pick-up in demand for higher yielding assets.  Technical factors are also signaling new strength as this market has broken through a pair of retracement levels at .8964 to .9018.  Continuing strength could drive this market to .9144 over the near-term.


Strong upside momentum fueled by greater demand for higher yielding assets has put the NZD USD in a strong position to test Gann angle resistance at 73.30.  Solid support has been established at .7185. 

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