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Currency Pair Overview: Dollar, and Japanese Yen Strengthen Overnight

Oct 28 09 6:47 EDT (LFB Forex)
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Currency Pair Overview:

Dollar, and Japanese Yen Strengthen Overnight 

Overall, the declines seen in the equity market sent the major pairs into risk aversion mode during the European session. The dollar showed some signs of strength for the third consecutive day, while the Japanese yen advanced against every other major currency. As long as the equity markets stay in the red, the dollar index and the Japanese yen will continue their current uptrend. 

TheLFB Charting LinkDollar Index Technical View: TheLFB Member Charts
4 Hour Chart: Short. Main price points: 74.95, and 76.66. Looking for: Wave i
 
Prices on the dollar index broke through the 75.90 resistance area, as discussed here yesterday and finished the black wave i leg. In this black wave i, traders now can easily count five waves up (blue line), which signals that it may be time for a corrective (near-term reversal) wave ii, if equity markets can stop the selling.
 
In this case, the market may trade down into the Fibonacci support levels of the wave i distance before prices then continue higher in wave iii. Overall; a bullish reversal looks to be the case, since the market came out with an impulse wave from the lows (wave i), which is confirming that a temporary bottom was hit.

The euro (Eur/Usd 1.4785) tested the neutral pivot point (1.4835) during the London open, and the pair bounced from that area and fell 50 pips. That followed a similar pattern in Tuesday trade, when it plunged nearly 150 pips after bouncing off the same neutral pivot point. On the daily chart, the euro is trading just below the 20-day moving average. 

The pound (Gbp/Usd 1.6320) is trading near the support trend-line of the last three days of trading, in the 1.63200 area. A break below this price point will probably sent the pound lower, straight into the 50- day moving average. For the rest of this week, the pound’s calendar is clear of any red-flag reports.

The aussie (Aud/Usd 0.9050) and the cad were the worst performers of the overnight session, both moving more than 100 pips, on the weakness that commodity markets had shown. With the declines seen, the aussie reached a two week low and broke below the 20-day moving average.

The cad (Usd/Cad 1.0730) was trading near to the break-even line at the start of the European session, but since then, the cad added 100 pips. The pair reached TheLFB R2 (1.0725) and is trading just below a resistance trend-line that has been holding the pair since early July.  

Trade Plan of the Day: TheLFB Trade Plan is Usd/Cad, one of the six that are available to members on the major pairs each day, plus four Jpy based cross pairs, plus S&P futures, oil, gold, and the dollar index.

The swissy (Usd/Chf 1.0225) followed the same pattern as in the prior few days, trading on very light momentum and lacking a clear direction most of the time. The pair is trading slightly below the 1.0240 resistance area, which had been an important swing point lately. Since the day started, the swissy had a range of only 40 pips, below the average for the pair, but a pattern that is becoming common recently. 

The yen (Usd/Jpy 91.05) lost 80 pips in Wednesday trade, declining for a second consecutive day. The declines come as the equity and the commodity markets plunged this week, something that has triggered the currency market’s risk aversion phase.

 
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