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Volatility Builds Against The Usd

Thursday trade continued the intra-day forex volatility with most charts resembling the look and feel of the 2008 and 2009 sub-prime and credit crisis; long spike, intra-day reversals out of nowhere, and most of the daily movement housed in one or two candles. The current trading environment is not for the faint of heart and offers little room for error in regard to timing the trade.

The Usd remains under selling pressure, and having been unable to break higher through the 100-day SMA area at 83.85 now looks as though the path of least resistance will be a new test of support at March lows around 81.50.

The fundamental outlook for the U.S. changed somewhat with the release of the FOMC Minutes that showed the 12 regional Fed members agreed that growth, expansion, employment, and housing will take up to five years to become established.

With that in mind, the speculative side of the market may find long-Usd safety plays not that appealing, with an increased cost of carry now having to be built into any long-term Usd position.

Global risk and demand markets are really struggling to attract buying interest, and are absorbing reactions from investors, speculators, and traders that adjust holdings and exposure to the market in very quick time in reaction to Q2 earning reports. 

The lack of equity stability, coupled with the fact that 2-3% intra-day swings are now the norm, means that traders will be looking to buy support and sell resistance until such time that stability returns.


Disclosure: None