The dollar down against most of its trading partners this morning as the economy, from earnings, once again seem to be on the rebound along with the US equity futures showing a higher open later today. The risk appetite has returned giving the Euro its highest figure since the collapse of the banking sector last year and is set to continue its gain. However, as the MSCI World Index gains 65% since March of this year, some 27 times its reported earnings of its companies, we are nearing resistance levels, certainly over the coming sessions. The focus is still the FOMC meeting comments regarding the end of the Quantitative Easing program, which if halts from this point, will see a gain for the dollar once again. With global economies all showing signs of recovery (many experts stating too fast), a retracement is inevitable for the stockmarkets in order to stablise the gains. Gold is now nearing its all time high once again (hitting 1035/40 per ounce in March 2008) again an indicator that a sell off most likely taking the stocks with it and increasing the value of the dollar.
Cable being hit hard against the Euro now at 0.9065 at time of writing, albeit gaining against both the dollar and the Yen in this mornings trading session. Against the dollar, cable hit the weeks 38.2% fibonacci retracement level of 1.6338/40 (hitting a high of 1.6342). now coming off and trading at 1.6315. With gold, oil and stocks all moving higher, expect a return to the risk appetite giving sterling a lift once again back to the fib level mentioned which if breaks and holds, could reach the 50% fib level of 1.64 (also falling I line with the 3 month 61.8% level) seen as a key resistance area. Support at 1.63 ahead of 1.6260. Beyond here, 1.6235. Keep watching the commodities for today's direction as they hold more 'security' that the stocks and the dollar.
The euro wiping the board against the majors during the European session as stocks rally along with the commodities. Currently trading at 1.4790, having reached a high of 1.4799 (highest level since 22nd September 2008). The next key resistance level is at 1.4845/50, last seen 22nd September 2008. With the FOMC meeting on Thursday potentially ending the QE program, expect the dollar to strengthen once again before the push back above current euro levels. Support currently at 1.4770 ahead of 1.4744. Further support at 1.4710 (38.2% fib level for the weeks trading).
The Yen this morning continuing its gain against the dollar now trading at 91.35 having hit highs at 91.12. As long as stocks continue their gain through and into the US session, along with commodity strength (oil and gold) expect further gains for the Yen. Support at the lows of today, should that break and hold, expect a further advance to 91. Below here, 90.60 the key level to be watching. Resistance at 91.58 (38.2% fib level for the weeks trading ahead of the lows for the week of 90.14.