Volatility Remains 4

Written by Research | 25 May 2010

USDX Pace-Indicator & Pivotal Price Point

With the upcoming news report on the Durable Goods (MoM) expectations of 1.4, Gross Domestic Product 3.30 from the previous 3.20, with Jobless claims lower outlook at 455k from the previous 471k and the final Michigan Consumer Sentiments this friday of 73.70 may well trigger another volatile sessions for the week ending the 28th of May.

However, the positive news on consumer confidence has been favorable for the continued build up of bullish sentiments with the traders. As the rhythm of the USDX is still solid to move higher currently working at the 87.57 basis point for the June futures contract and the Spot USDX currently at the 86.53 bp would now attempt to retry its original target objective of 88.80 for the June month as we have mentioned from our last market view analysis. Any combined good report better than expected figures from these week's reports would be the catalyst for the USD to move higher and considering the sustaining volumes and positive sentiments that has been fuelling the trend on a reinforced basis.

This has prompted the EURUSD and the GBPUSD to move lower and is back down to the 1.2247 as of this writing and the GBPUSD at the 1.4330 slight recovery from their low price levels. No changes has been influential in spite of the technical conditions making the recovery very insignificant. These short-live corrections on both majors are simply price adjustments from the oversold areas.

The technical key market price for the USDX is our main focus as this has always been our core value in analyzing where a pivotal point may occur even on a temporary basis. Although, the actual core market sentiments is still extremely bearish. No fresh incentives are in the market except the possibility of the USD to correct slightly on a daily basis as what has happened during the closing of the last week on the 21th of May trading sessions. This week's reports would be some fresh news other than the spillover sentiments on the Euro Zone market as most investors and traders are fixed on the downward price levels of the Euro and the Pound.

The obvious ripple effect of the Aussie and the New Zealand Dollar as well as the USDJPY being one of the favored pairs to be cross traded as the directional trend for these currency pairs are also defined. As for the Aussie, the inital support we are looking at is at the 0.8000-65 range where a probable reaction could take place as another corrective divergence can occur on a daily basis that may seem to be supportive at this time.

The most concerned criteria to watch is the total trading range from their hi/lo prices that would snap back in both directions before the end of this month of May. Having said that, the tendency now is to carefully be prepared for these action to take place; as the rapid price swings may be a violent up and down swings that may also result to subtantial scalping opportunities for day traders alike. Although, the danger comes whenever price run far faster from any position that would be negative upon entry. Otherwise, if and whenever prices remain passive until friday's news the reluctancy of traders to trade may short live.

The USDJPY may find some reaction on the 88.20 price levels which is within its striking distance together with the USDCHF next target at the 1.1880 extension on the extreme high whenever the USDX may reach it 88.80 objective. As most major players and participants from these institutions are capable of playing these extreme price range. the behavioral pattern for these two still hold true in the obvious way the directional price trends are heading in opposite directions.

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