Fundamental

Technical

Futures

Central Banks

Forex Brokers

Trading Tools

More Tools

 

Confidence in U.S. Financial Industry Supports Dollar

By:   James Hyerczyk
  • 23-07-2008
0
votes
 
View Comments (0)
Previous Analysis | Next Analysis
Text Size
Print
Email
Add a Comment
The EUR USD continued its reversal down with another sharp break on Wednesday.

The U.S. Dollar is reacting positively to the developing stability in the financial industry.  

News that the Fannie Mae and Freddie Mac plan is advancing without incidence through Congress has also been helpful to the Dollar.

Crude oil continued to break putting extra pressure on the Euro while financial traders in the Chicago trading pits are increasing bets that the Fed will raise rates in September.

A strong sign that the EUR USD is headed lower was the follow through break from Tuesday's reversal down.

This follow through was important because it shows traders are willing to accept Treasury Secretary Paulson's call for confidence in the U.S. financial sector.
It also shows the power the Treasury can wield over the Forex markets.  

On the monetary side, the call for higher interest rates from Philadelphia Fed President Charles Prosser has also been accepted by traders as interest rates crept higher once again.

There is no question that the combination of strong comments from the Treasury and hawkish comments from the Fed is beneficial to the Dollar.

The Beige Book report weakened the Dollar somewhat as all 12 Fed regional districts reported "elevated" or "increasing" prices in June and July.  

District banks also reported a slow down with some districts reporting "weakening or softening in their overall economies."

For the most part, however, the Dollar managed to hang on to gains after the release of this report.

Technically, this market is headed to a major retracement area at 1.5670 to 1.5583.  Additional support comes in at 1.5637.  

Look for the possibility of a retracement rally to start in this zone.

Share:
Digg
Del.icio.us
Next Analysis: The current market sentiment
Content Provided by:
James Hyerczyk

James A. Hyerczyk is a registered Commodity Trading Advisor with the National Futures Association.

Mr. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor.


DISCLAIMER:
Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee from James A. Hyerczyk and J.A.H. Research and Trading or its subsidiaries and/or affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of positions such as "spread" or "straddle" trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.


Comments
Add a Comment
Please Login to Post a Comment
User Email:
Password:
  Remember Me Register For Free
  Forgot Password | Help
Become a member and get 6 free Forex courses by OTA!

 
  • Webinar
 
  • Charts
 

 
  • Survey

How many analyses do you read on daily basis?

I don't read them
1-3
4-6
7+
As many as I can find

 
ForexPros.com Newsletter
 

 
 

Special Offers: