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Initial Usd Bounce In Place

The forex week has started with a continuation of the change in the pattern of trade, highlighted last week, that has followed through overnight with Asian session moves that broke the previous session ranges. In an average 22 trading sessions a month, the Asian session from 17:00-02:00 ET will have momentum about 20% of the time, with most sessions offering very little sustainable price action. 

Monday offered early price movement that favored the long side of the Usd, as recent client notes have warned may happen. Traders will be looking for the European and U.S. session to now follow suit and prove the moves have legs.

If the major currencies are to add to overnight losses against the Usd, it will likely be as a result of equity markets finding sellers, and with October being historically a very volatile month, it would be no surprise to see the last two weeks of trade in October offer some volatile movement.

The pivotal price point that will determine dollar index direction is the S/P500 holding 1150, or not. A break lower from 1150 will push the dollar index up through 78.50 resistance, whereas a bounce off support at 1150 will likely retest 76.50 dollar index support.

1-Hour chart reads on the major pairs have signaled a long-Usd outlook, with pivotal 4-hour reads all now testing support that was set by 8% Usd losses in September. Forex traders are at an inflection point on the Usd, and things may get volatile as global market participation is forced into reacting to equity earning season and Mutual Fund year-end on October 31st.

The Treasury Income Data from the U.S. at 09:00 Et and Reserve Bank of Australia interest rate meeting Minutes at 20:30 ET are the two red-flag economic releases of note on Monday, which allows traders a chance to gauge momentum and speculative interest with sound-bite headlines getting in the way. 

Disclosure: N/A