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Bernanke's Pessimism Does Not Matter for Dollar Rally

|Includes:Enhanced S&P 500 Covered Call Fund (BEO), BEP, CNY, DIA, DJ, ERO, EWA, EWC, EWJ, EZU, FEZ, FXB, FXC, FXE, FXF, FXY, GBB, GLD, GRE, IFNA, IWB, JYF, JYN, MZG, NFP, QQQ, SPXL, SPY, UDN, USD, UUP, VCR, XLY, YCL, YCS
In the midst of low volatility, the EUR/USD continued its downward movement. Spurred by the lack of economic events for the remainder of the day, the currency market will without a doubt have low volatility until the Asian Session. The United States Dollar rally against its Euro counterpart came as European data continued to show progress to the downside. With sovereign debt issues still lingering throughout the region, the investments flowing through the region are slowly coming down. Sentix Investor Confidence, a gauge of investing activity in the Euro-zone, slipped to 9.7 from 14.0 printed in the previous month. The United States Dollar failed to weaken after Federal Reserve Chief Ben Bernanke signaled that Quantitative Easing 2 will be in excess of $600 Billion previously allocated. Bernanke appearing on an interview yesterday warned that the United States economy is near levels on which it can no longer support itself. Continuing with his pessimistic rhetoric’s, Fed’s Governor pointed that it will take at least 4 to 5 years for the United States to gain all of the jobs lost during the recent downturn. Approximately, 8 Million jobs were lost during the recent recession, only over 1 Million jobs were added back since then in a cost of QE1 and QE2. Friday’s Non Farm Payroll figures did not paint a rosier picture as merely 39,000 jobs in November. However, the United States Dollar remains in relative uptrend outperforming against all other counterparts. Bearing a downtrend in mind, we turn to technicals to derive desired levels of support and resistance. Currently, lower1st Standard Deviation of the Bollinger Bands will act as a strong support level which is lingering at 1.3200. In the mean time, 20-day Simple Moving Average will act as a strong resistance level placed at 1.3400 as EUR/USD failed to clear that level for 3 consecutive sessions.


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Stocks: BEO, BEP-RETIRED, SPXL, CNY, DIA, DJ, ERO, EWA, EWC, EWJ, EZU, FEZ, FXB, FXC, FXE, FXF, FXY, GBB, GLD, GRE, IFNA, IWB, JYF, JYN, MZG, NFP, QQQ, SPY, UDN, USD, UUP, VCR, XLY, YCL, YCS