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Currency Pair Overview:
Majors Topple The Usd
Overall, the dollar index took a strong beating in Wednesday trade, even though the equity market failed to provide any help in the decimation wrought by the major currency pairs. Wednesday trade sent the dollar index as low as 74.20, the lowest value touched since August 08. In addition, the dollar declined against almost every single currency in Wednesday trade, including the emerging currencies as Czech Koruna and the Russian Ruble. The dollar’s decline over the last few months of trading was triggered by the twin deficit that the U.S. economy has in the budget and trade deficits, and by the Fed’s pledge to maintain the key interest rates at very low levels. On the medium to longer term, the dollar’s decline is likely to continue if the market remains in a risk-tolerant phase.
Momentum: The index went into Neutral mode on 26th October and has struggled to find the strength to easily create and hold a Short trend. The sentiment is flowing from overbought to oversold in quick time and is following the global market open and close of Asian, European, and U.S. commercial markets. This is a tight trading range that is sitting at yearly lows, yet looks comfortable
Elliott Wave: The dollar index has broken through the red wave i) low and 74.70 support area, which means that a red wave iii) may be in progress. If that is the case then the market may move down to the 74.20 region over the coming days, while the market trades below the red wave ii) top and 75.88 resistance.
We are looking for an impulse bearish structure (five waves of decline) in the black wave c/iii leg.
The euro (Eur/Usd 1.5140) found the momentum necessary to push above the 1.50 area in Wednesday trade, breaking another milestone. Throughout the day, the euro moved higher at a constant pace, something that does not happen very often. Since the low set in March, the euro advanced nearly 20%, which is a strong performance for the currency market that has a lower return compared to other financial assets.
Momentum: The pair went into Neutral mode on 26th October and then struggled to find the momentum to create and hold a long trend. On 19th Nov it signaled a Long move that is just about holding. The sentiment is flowing from overbought to oversold in quick time and is following the global market open and close of Asian, European, and U.S. commercial markets. This is a tight trading range.
Elliott Wave: The Eur/Usd pair is testing the 1.5000 psychological level after the recent bounce from the 1.4880 support region, where wave II)/B) was completed. Prices have already traded above the black wave I)/A) high, which suggests that a Long wave III)/C) is in progress. If that is the case then traders will look for a move into the 1.5060 zone, where a break-out and a daily close above, will put the 1.5200 target in play.
The pound (Gbp/Usd 1.6720) had already gained 150 pips by the start of the European session, and since then failed to push any higher, even though the dollar index fell across the board. During the first part of the day, the pound advanced ahead of the U.K. Q3 GDP report, which showed that the economy contracted less than initially estimated.
The aussie (Aud/Usd 0.9320) is currently trading just beneath TheLFB S2 (0.9325) area, after it gained 110 pips throughout the day. Even though the aussie saw some strong trading volumes since the beginning of the year, lately its has taken a strong dive. The 14-day ATR fell to 100 pips, which is far below the average ATR set at the beginning of the 2009, which was somewhere in the 160 pips 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 cad (Usd/Cad 1.0450) saw a strong trading day on Wednesday, especially after it was announced that the Russian Central Bank is going to use the Canadian dollar as part of its reserve currency. Right now, the cad is struggling to break below TheLFB S3 (1.0450) area, after it loss 120 pips since the beginning of the day. It is a rare event for a major pair to touch TheLFB S3.
The swissy (Usd/Chf 0.9955) broke free from the range developed during the last two weeks of trading and managed to fall 120 pips. This has sent the Swiss Franc beneath the parity area with the U.S. dollar. With today’s sell-of, the swissy set a new yearly low.
The yen (Usd/Jpy 87.30) is heading strongly towards the 87.00 area, the lowest point that the market has touched since 1995. However, some say that rather soon, the BoJ might intervene in the currency market since the strong yen is a major destabilization factor for the Japanese export driven economy.
Disclosure: No positions