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U.S. Dollar Edges Lower as Investors Seek Risky Assets

James Hyerczyk from ForexHound.com at 01/05/10


The U.S. Dollar continued its New Year slide as investors sought higher risk assets.  Overnight an index representing a trade weighted basket of currencies turned it main trend down on the daily chart on a trade through 77.32.  The chart pattern now suggests a correction to 76.31 to 75.80 is imminent. This move would represent a normal retracement of the entire 74.17 to 78.45 rally.  Traders are citing the stronger global economy and low interest rates in the U.S as two reasons for the renewed interest in higher yielding assets.


The EUR USD continues to show strength.  The current chart pattern suggests a move to 1.4680 is likely over the short-run.  Minor resistance at 1.4503 could slow down the current upside momentum.


The main trend remains down in the GBP USD but buyers could step in now that the British Pound has retraced its recent three-day rally.  The short-term range is 1.5832 to 1.6240.  The retracement of this range is 1.6036 to 1.5988.  If the trend is getting ready to turn higher, then look for buyers to begin to step in.


The USD JPY continues to weaken following yesterday’s closing price reversal top. Last night’s follow-through to the downside was confirmed which could mean the start of a correction all the way back to 88.57.  The first downside objective today is 90.83 which is an uptrending Gann angle from the 84.83 bottom.


The USD CHF is also showing overnight weakness.  Based on the range of .9918 to 1.0507, traders should watch for a correction to 1.0212 to 1.0143 before new buyers step up. 


Rising gold and crude oil prices as well as firm equity market are helping to pressure the USD CAD.  The main trend is down with 1.0265 the next downside objective.  A key retracement level at 1.0459 is the new resistance.


Strong demand for higher yields is helping the AUD USD overnight.  Last night’s trading action has this currency pair trading above a key .618 retracement level at .9144.  The next upside target is a main top on the daily chart at .9194.  A trade through this price will turn the main trend to up.


The main trend turned up in the NZD USD yesterday as buyers pushed this currency pair through a main top at .7318.  Downtrending Gann angle resistance at .7535 is currently being tested.  A close over this price will put the market on the bull side of this angle and indicate further strength is likely.

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