When will the Dollar fight back?

Technical Snapshot

Technically Speaking

EUR/USD

EUR/USD

The Euro rallied slightly today which marks the 6th straight trading session the Euro has gained against the Dollar. The Euro has now approached resistance at 3850 which could mean the completion of a triple top. Daily stochastics are in overbought territory but 4hr stochastics have crossed back up near the overbought region. Look for the Euro to either float around 3850 or rise slightly, but we should see the pair drop soon.

GBP/USD

GBP/USD

The Cable also rallied today against the Dollar and it seems that it may close slightly above the 2.0300 mark where it was having a hard time closing above there the past 2 days. However, there is a bearish divergence forming on the 4hr chart and daily stochastics have been in overbought territory for several days now. The Cable may rise to 2.0350 but I would look for this pair to drop soon.

USD/CHF

USD/CHF

The Swissy stayed pretty quiet today, but the Dollar did manage to make a small gain. The 1850 level has proven to be a good support area and now it seems that the pair is heading back up. 4hr stochastics are trending up and daily stochastics are in oversold territory which confirms my bullish bias. Look for the pair to rise up to its 50 EMA on the 4hr chart at around 1970.

USD/JPY

USD/JPY

The Dollar ended up rallying to 114.00 like I said yesterdayand now the pair is continuing to move higher. The pair is forming a bearish hidden divergence on the 4hr chart and daily stochastics are trending down. I would watch for the Yen to continue rising to its 50 EMA on the 4hr chart at around 114.70, but we should see the pair fall from there and end up right back near the 114.00 mark.

Fundamentally Speaking

I’m not really big into fundamentals but I feel that they are important to discuss. In this section I will be posting fundamental tidbits that I find interesting from various sources. If you find an article that you think would benefit everyone, please email me (Big Pippin) with your username, the article, and a link to where members can read the entire article.

Now onto the Fundamentals:
  • Alan Greenspan he’s got a case of dejavu as he stated that the current US economy reminds him of the time right before the stock market crash in 1998…Hmmm…that’s not good! Al quotes:
    • "The behavior in what we are observing in the last seven weeks is identical in many respects to what we saw in 1998, what we saw in the stock-market crash of 1987." He then went further to say this…. "the expansion phase of the economy is quite different, and fear as a driver, which is going on today, is far more potent than euphoria."
  • Rate cut for the US in September? Chuck Butler seems to think so in his Daily Pfennig from yesterday.
    • "The Fed Heads have really backed themselves into an ugly corner… And they had better come out of it with both guns "a blazin’" on Sept. 18th when they meet next. By this I mean the rate cut had better be something of significance… Say… 50 BPS!"
  • Regarding the trade balance:
    • "So far this year, the U.S. trade deficit is running at an annual rate of $711 billion, down from $758.5 billion in 2006. Last’s year trade deficit marked the fifth year in a row where the trade deficit hit an all-time high.
      Economists believe the trade balance will finally shrink this year as U.S. exporters benefit from strong economic growth in many countries overseas and a weaker dollar against many currencies. That makes U.S. products cheaper on foreign markets and imports more expensive for American consumers."