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Currency Pair Overview:

Pound Drops On BoE Inflation Report

Overall, the currency market saw a flat Asian session, but around the European opening bell, the dollar index started declining at a strong pace against the major pairs. However, this sell-off was short lived, and the market came to a standstill ahead of the BoE Inflation Report. Looking ahead, the U.S. session will be influenced by the U.S. Veterans’ day and by the Canadian’s Remembrance Day

Dollar Index Technical View: TheLFB Member Charts 
4 Hour Chart: Short. Main price points: 74.95, and 76.82. Looking for: Wave iii

The dollar index has broken through the 75.00 lows recently, driven by a higher equity market. As such, wave V) is now on the way to new lows with a black sub-wave iii in progress, which may hit the bottom somewhere around 74.20 area. In this zone traders may look for a corrective bounce into the black wave iv pull-back, before the down-trend continues.

The euro (Eur/Usd 1.45035) reached the 1.5050 area during the European session, where the current high of the year is located. The single currency advanced 70 pips throughout the early part of the European session, but despite some attempts, it still has failed to move above that area. Once this level is taken out, the road is practically clear up to the 1.5250 area.

TheLFB Trade Plan of the Day is one of the six that are available to members on the major pairs each day, plus four Jpy based cross pairs, as well as S&P futures, oil, gold, and the dollar index. 

The pound (Gbp/Usd 1.6665) saw some attempts to move higher, especially after the 04:30 EST better than expected labor data numbers, but then saw a strong flow of short orders coming though the BoE Inflation Report meeting. At that time, the pound plunged 150 pips in just 15 minutes, after the BoE had raised the inflation and interest rates forecasts for the U.K. economy. In the near-term, but still raised concerns for growth all the way through 2011.

The aussie (Aud/Usd 0.9310) is currently trading within the 60-pip range of the last day of trading. Still, the pair had an attempt to break lower, but the move was retraced rather quickly. On the daily chart, the aussie is trading above all the important moving averages, close to the high of the current year.

The cad (Usd/Cad 1.0455) continued to move lower for a third consecutive day in Wednesday trade, falling another 50 pips. For now, the cad is consolidating just above TheLFB R1 (1.0455), an area that usually has offered challenges to break for the Canadian dollar in intra-day trade.

The swissy (Usd/Chf 1.0040) fell to the 1.0040 area, the last important level that holds the Swiss Franc from touching parity against the dollar. Over the last few months of trading, the Swiss franc has been constantly strengthening against the greenback, something that helped the Usd/Chf decline a little more than 15% since March 09, even though the rate differential between the two currencies is rather small.

The yen (Usd/Jpy 89.85) started the Asian session on a strong note, reaching the lowest value in a month. However, the move was very easily retraced as the market headed towards the European open. The yen is trading, once again, near the 90.00 swing point area.

Disclosure: No positions