USD Indecision

Written by Research | 02 November 2009

An Overview of Sentiments 

The USDX will naturally experience some corrective movements on a daily basis since the consolidation for the past few days shows how the USDX have moved due to the GDP economic numbers which were better than expected of 3.5.

However, the anticipated upward movement was made ahead of the market report which led the US dollar to correct after the the release. Plus the market traders have anticipated that the GDP numbers may be favorable making such movements ahead of the report. But the Consumer Confidence were not as favorable prompting Stock and other markets to dwindle last Friday and may probably spill over these negative sentiments this opening og the week of November.

It was obvious that the dollar's upward direction has been much awaited as we have reported the past week. Although, the corrections on the GBP/USD and the EUR/USD have been slightly over due. As the corrective moves on most majors goes hand in hand with the cyclical pattern of price adjustments towards the closing and opening of each month as we have seen this month.

However, on the opening of the month of November, the dollar's decline on a daily basis will be made as the consolidation between the 76.80 - 74.90 ranges will be the trading range from now till the end of the this month. Although, we do expect that if any favorable numbers on the economy will show more proof of the recovery ; we would see the USDX move back higher. As the US Dollar has been the key element in market trend directions against the other majors, we would be closely monitoring the Dollar's movement more tha the other.

The USD/JPY may also provide some direction of the market. Although, its influence may be quite limited at this time since the most investors have shifted their cash capital investments into Gold commodity. The Euro may still continue to hold its ground versus the British Pound but the EUR/GBP cross rate may still head lower as the GBP/USD consolidates on a day to day basis.

However, on the opening of the month of November, the dollar's decline on a daily basis will be made as the consolidation between the 76.80 - 74.90 ranges will be the trading range from now till the end of the this month. Although, we do expect, if any favorable numbers on the economy will show more proof of the recovery ; we would see the USDX move back higher. As the US Dollar has been the key element in market trend directions against the other majors, we would be closely monitor the Dollar's movement more tha the other specially with the unfavorable reports after the GDP numbers which could have made some head way except the VOI were not reinforced as shown on the traders commitment report on long and short positions.

The US Dollar have showed signs of a recoveryfrom a low level of 75.08 bp. through the past week of trading, setting a substantial low against the Euro and other prominent majors along the way. As the US S&P 500 headed lower and other financial risk sentiment provided the support for the dollar slight trend reversal. With an extremel bias Dollar-bearish sentiment amongst all traders and investors, it was lto no surprise that the beaten down currency continued higher through Friday’s close which happens to be the end of the month's trading where traders makes the necessary adjustments in their positons. We have stated before that the USD Index was much more likely to establish some new lows from the August.

EUR hs held onto the 1.4770 handle this afternoon and is currently trading at the day's high. Intraday shorts continue to cover and with no technical resistance until 1.4850-60, traders will turn to Europe soon for clues. There are some sellers here at 1.4750-70 but nothing large. There has been a lot of AUDJPY buying this afternoon by Japanese retail accounts ahead of the RBA rate decision tomorrow. It is widely expected that the RBA will raise by 25 bp, with some expecting even 50bps