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Market Wire Update:
The Dollar Index And The 78.00 Area
Forex Trader Note: The dollar index is swinging around the 78.00 area, with a close above 78.50 breaking a price point that has been very important to the market in trade this year. A move under 77.50 would allow the major pairs to test the strength of recent Usd buying that as yet really has not been back to test the break-out areas.
The major pair price points show that the long-Usd trend is firmly in place, with momentum reads that are indicating that there is little room to move before overbought reads impact trade. The latest leg of dollar buying has pushed near-term time-frames into overbought reads on the dollar.
There has been separation between the major pairs in the strength of their dollar based moves, and for the first time since the credit crisis hit home we are seeing consistent divergence in the dollar index components, with varying percentage moves from each pair. The market has also lost the S&P/Usd converse correlation that has dominated for 18 months, and instead is building a Usd/Oil converse link.
Red Flag Economics:
04:30 EST Gbp MPC Minutes Exp 0-0-9, Prev 0-0-9
08:30 EST Cad GDP Exp 0.3%, Prev 0.4%
08:30 EST Usd Personal Spending Exp 0.6%, Prev 0.7%
10:00 EST Usd New Home Sales Exp 442K, Prev 430K
10:30 EST Usd Crude Oil Invent. Exp -1.5M, Prev -3.7M
Dollar Index: The dollar index went into Neutral mode on 26th Oct and moved tentatively Long in December. The near-term path of least resistance is consolidation around new highs, with long-bounces on weak equity trading days. The weekly close above 76.00 was a signal that buyers are dominating, and signaled the potential in a momentum reversal. Swing Point: 77.95
S&P Futures: The S&P futures market confirmed a Long momentum read on Nov 11th and has built a near-term support base around 1105. The 1115 and 1125 area will be a major resistance point to now close above this week. The moves to test and hold support are impressive, and now backed with Japanese and German markets that are also looking bullish. Swing Point: 1110
Crude Oil: There is still a very flat momentum read to crude oil trade that has been in place since 6th Nov. The 72.50 area continues to be a main price point, after sellers were held at bay recently around 69.50. The 75.50 area is the topside number to breach. Holding above 70.00 this week looks set to trigger long orders, and will pressure the dollar index being able to move too much higher without a pull-back to test support. Swing Point: 73.80
Gold Bullion: Gold signaled long on 3rd Nov and started to reverse that mode in December with bouts of profit taking. 11075 is near-term support, backing any further long tests of 1100. Now looking for signals that support is in place. Swing Point: 1085