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Currency Pair Overview:
Market Stall In U.S. Trade
After an active overnight session, the currency market and dollar index came to a virtual standstill throughout the U.S. trading hours. The major pairs declined again compared to the U.S. dollar during the Asian and the European sessions, in a move that was strengthened by the negative equity markets seen at that time of the day. Looking ahead, the market is expected to start testing the near-term swing point areas, ahead of the infamous NFP report, scheduled for Friday at 08:30 EST.
Prices on the dollar index reached new lows around the 74.00 zone where the trend quickly reversed. Technical traders are looking for a move higher now, away from an ending diagonal pattern shown in the wave V) position, as prices have already broken through the upper resistance line and 75.82 zone, which signals that a bull market on the daily chart is in process.
If the wave count is correct then the market should trade much higher over the coming weeks and months, with a three wave move (red I/A-II/B-III/C) towards the 81.00 region.
The euro (Eur/Usd 1.4320) fell as much as 100-pips during the first part of the day, but managed to stabilize in the 1.4300 area, near TheLFB Support 1 swing point. Around the same area the Eur/Usd hit a support trendline that dates back to Dec 22 09. A break below this trendline has the potential to send the pair much lower, but such a move is unlikely to come ahead of the NFP report.
The pound (Gbp/Usd 1.5935) the BoE’s interest rate decision had little effect on the pound in trade on Thursday. In the past, the Monetary Statement sparked strong volatility, but that was not the case. Shortly after the BoE release, the Gbp/Usd entered in a 40-pip sideways range. On the daily chart the pound continues to be in short mode.
Aussie (Aud/Usd 0.9165) is currently forming a shooting star formation on the daily chart, which is a sign that the prior trend is close to topping. In case the aussie is really turning around, the first test for the newly formed downtrend will be in the 91.00 area, near the 50-day moving average.
The cad (Usd/Cad 1.0345) is closing in the green for the first time in five days, pulled higher by the disappointing Ivey PMI data. The report showed that the business side of the economy contracted in December for the first time in 7 months, something that had a negative influence on the value of the Canadian dollar. However, over the medium to longer term, the cad is expected to continue its downtrend.
Usd/Cad has been slow and choppy for the past few weeks, as the upper trend-line of a channel held as good support. This may be a signal that the black wave A/1 bottom is in place, and that a Long wave B/2 correction with a blue sub-wave A)/1) is underway.
The market needs to break through the 1.0868 resistance to confirm a bullish continuation.
The swissy (Usd/Chf 1.0335) traded within the same 100 pips range for the fourth day in a row. On its own, the swissy will not be able to break free from this range, which is flanked by three important daily chart moving averages: the 20, 50 and by the 100.
The yen (Usd/Jpy 93.25) is consolidating just above the 93.00 area, and near the 200-day moving average. The yen is likely to become very volatile especially during Friday’s U.S. session, when the NFP numbers will hit the newswires. The Usd/Jpy is very sensitive to U.S. macroeconomic data.
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.
Disclosure: No positions