Currency Pair Overview: U.S. Session Logjam

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Currency Pair Overview:

U.S. Session Logjam

Overall, the currency market was very active during the overnight trading hours, but things came to a standstill through the U.S. session. Shortly after the U.S. open, the major pairs entered into  tight ranges and moved only sideways all day. This was aided by the light U.S. calendar. When judging from a historical perspective the currency market is usually very slow during the U.S. trading session. A change from this pattern occurred during the credit crisis, when most of the trading was concentrated in the U.S. session.

Dollar Index Technical View: TheLFB Member Charts
Daily chart trend: Short. Main price points: 74.00 – 74.30, and 75.00. Looking for: Wave C)

Prices on the dollar index have reversed over the past week around the black resistance line, influenced by a higher stock market. Currently the market is threatening the yearly lows, where a break-out will push prices towards 72.00, and all-time lows. This is shown in the blue wave V), of an extended red wave V leg, of larger C), which may find the lows somewhere around the 74.00 – 74.30 target area.

The euro (EUR\/USD 1.4960) gained 140 pips during the Asian and the European sessions but since then the market entered into a 35-pip range, just below the 1.05000 swing point area. This is the third time in a week that the market has tested the 1.5000 area and failed to push the price action any higher. On the daily chart, the euro is trading above all the important moving averages.

Euro Technical View:
Daily chart trend: Long. Main price points: 1.5062, and 1.5200. Looking for: Wave C top

EUR\/USD is threatening the 1.5062 area after the market was unable to break through the daily support line in the past few weeks, which is connected from the 1.2329 lows. Traders may already be targeting the 1.5200 zone, around the Fibonacci resistance levels shown on the chart below.

The wave count is showing an un-finished wave C leg, with an extended structure in the black wave 5. Currently, the blue sub-wave 5) may to be developing, which should break through the 1.5062 highs in the near-term for a move towards the 1.5200 target zone.

Once the impulse structure up from the 1.2329 zone is complete, a larger at least corrective pull-back should follow.

The pound (GBP\/USD 1.6610) is currently consolidating in the 1.6600 area, which has been the main swing point of the last six months of trading. A break above this level could shift the pound’s outlook to long, but would need strong momentum to hold higher.

The aussie (AUD\/USD 0.9240) gained 130 pips in Monday trade, the most in almost a month. The current uptrend comes after the pair formed a bullish pin-bar in Friday trade, after bouncing from a 4-month old support trend-line. During the upcoming Asian session the market expects the Australian CB Leading Index report.

The cad (USD\/CAD 1.0560) shed about 140 pips, declining for the first time in four days. Moreover, the cad managed to break below the 1.0620 area, where the 20 and the 50-day moving averages formed a strong support area, that has now turned into a resistance area. In order for the cad to continue its downtrend, the commodity market would have to stay in the green.

The swissy (USD\/CHF 1.0100) continues to trade within the wide range developed throughout the last few weeks of trading. In order to break free from this area, the pair would have to break below the 1.0050 area, or above the 50-day moving average 1.0215.

The yen (USD\/JPY 89.00)’s trading volumes and ATR (average trading range) have fallen to very low levels lately, far below the average of the last few months of trading. This suggests that institutional money is avoiding this pair, while it is floating freely and open to intra-day speculation. The lack of institutional money may be a consequence of the recent rumors that the Bank of Japan is preparing to intervene in the market to devalue to the Japanese yen.