The Forex Pattern, Price & Time Report

Yen Volatility Could be High Without Clarity and Conviction

jhyerczyk@yahoo.com (James A. Hyerczyk) — Fri, 03 Sep 2010 20:52:00 GMT

The USD JPY traded sharply higher Friday morning, but the strong gains faded after a report showed the U.S. Services Sector slowed during August. The rise in demand for stocks appeared to be reviving the carry trade earlier in the session. This is a situation where investors borrow the lower yielding Yen then sell it to invest in higher yielding assets. Friday’s trading action in the Japanese Yen suggests that traders can’t make up their minds as to whether risk is on or risk is off.

The Japanese Yen began to strengthen against the Dollar after the weak U.S. ISM Services index indicated slower growth. The Dollar/Yen pared its gains while some traders took defensive positions against the possibility of a weaker U.S. economy.

The chart pattern suggests a possible double-bottom formation. This pattern will be confirmed if 85.90 is broken and at the same time will signal a change in trend to up.

Friday’s better than expected U.S. Non-Farm Payrolls data put risk back on the table. Although this report showed that the economy was still shedding jobs, private sector hiring was above the consensus, driving investors into equities and out of gold and Treasuries.

The shift in risk sentiment drove the U.S. Dollar lower especially against the commodity-linked currencies. The Japanese Yen was also punished as traders left the safety of the lower yielding currency.

Upside momentum was building in the Australian Dollar, putting it in a position to test the early August top at .9221. Recent Aussie economic data also led to speculation that the Reserve Bank of Australia would raise interest rates at its next meeting on September 7.

The strong rise in the Euro is a sign that investors are becoming confident that European economies may be emerging slightly ahead of the U.S. economy, carried by great economic numbers from Germany.

Earlier in the week, the European Central Bank left interest rates unchanged, but post report comments from ECB President Jean Claude Trichet provided some support for the single currency when he announced that the central bank would continue to provide a range of emergency funding to commercial banks through the end of 2010. He also downplayed the strength of the economic numbers which he tends to do each time the Euro Zone economy appears to be turning the corner.

Thin trading conditions may have contributed to the sharp break in the Dollar this week, so we are likely to find out next week where investors stand on the Greenback. Although the U.S. employment data was slightly better than expected, the country did lose jobs for the month. Some feel that this report took some of the pressure off the Fed to implement additional quantitative easing, but others remain concerned about the slow down in the economy because of today’s weaker ISM services data.

If T-Bonds continue to break and equities rise, then this will be a sign that trader appetite for risk is back on. This will lead to more pressure on the Dollar. The tricky market will be the Dollar/Yen. The revival of the carry-trade will pressure the Yen, but further weakening in the U.S. economy may encourage traders to dump the Dollar in favor of the Yen. If this occurs, then look for renewed talk about Japanese government and Bank of Japan intervention. The Yen by far will be the most difficult market to assess over the short-run and should be avoided until the catalyst driving this market can be identified with clarity and conviction.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

U.S. Dollar Punished as U.S. Jobs Data Puts Risk Back on Table

jhyerczyk@yahoo.com (James A. Hyerczyk) — Fri, 03 Sep 2010 13:01:00 GMT

This morning’s better than expected U.S. Non-Farm Payrolls data has put risk back on the table. Although this report showed that the economy was still shedding jobs, private sector hiring was above the consensus, driving investors into equities and out of gold and Treasuries.

The shift in risk sentiment is driving the U.S. Dollar lower especially against the commodity-linked currencies. The Japanese Yen is also getting punished as traders leave the safety of the lower yielding currency.

Upside momentum is building in the Australian Dollar, putting it in a position to test the early August top at .9221. Recent economic data has also led to speculation that the Reserve Bank of Australia will raise interest rates at its next meeting on September 7.

The USD JPY is trading sharply higher this morning. The rise in demand for stocks appears to be reviving the carry trade. This is a situation where investors borrow the lower yielding Yen then sell it to invest in higher yielding assets. The chart pattern suggests a possible double-bottom formation. This pattern will be confirmed if 85.90 is broken and at the same time will signal a change in trend to up.

Traders should remember that Monday is a holiday and trading may thin out as the session progresses. The President is also speaking today and that may cause traders to move to the sidelines.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

U.K. Economy Cooling; Pound Downside Target Remains 1.5113

jhyerczyk@yahoo.com (James A. Hyerczyk) — Thu, 02 Sep 2010 20:47:00 GMT

Concerns over a slowdown in U.K. manufacturing growth and mortgage market worries helped pressure the British Pound. Sterling investors seem to be pre-occupied lately over the new austerity measures and tax hikes. Many still feel the economy will slump because of these two programs.

The GBP USD chart indicates room to the downside with 1.5113 a potential downside target. Short-covering could trigger a quick pop to 1.5600, but this likely will be another selling opportunity.

The U.S. Dollar traded flat to lower as most traders remained cautious ahead of Friday’s U.S. Non-Farm Payrolls Report. Earlier this morning the Dollar showed little reaction to the European Central Bank’s decision to hold interest rates steady and a slight drop in U.S. Weekly Initial Claims.

Jobless claims remained a concern among investors because they remain at a high level. This is an indication that the U.S. economy is cooling while fueling worries that the recovery may not be sustained if private firms continue to refrain from hiring new workers.

The Euro held steady following the ECB’s decision to hold interest rates at 1%. The market did have a positive reaction to the comment from ECB President Trichet who said the recovery “should proceed at a moderate pace”.

A choppy stock market led to mixed results in the commodity-linked currencies. The New Zealand Dollar traded better, but the Australian and Canadian Dollars were flat which may be a sign that Wednesday’s strong rallies may have been overdone.

The rally in the U.S. equity markets has temporarily stopped the decline in the USD JPY. Earlier in the week the Japanese Yen rose sharply after the government and the Bank of Japan failed to take intervention action and opted to increase its quantitative easing program. Stronger equity markets could revive appetite for risk and the carry trade, leading to a stronger Dollar/Yen.

Although the Dollar is down this week, many large traders and institutions have been on the sidelines due to tomorrow’s employment report and Monday’s U.S. Labor Day holiday leading to speculation that this week’s action was due to thin trading conditions.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Slow Trade Ahead of U.S. Non-Farm Payrolls Report

jhyerczyk@yahoo.com (James A. Hyerczyk) — Thu, 02 Sep 2010 18:00:00 GMT

The U.S. Dollar is trading flat to lower at the mid-session as traders remain cautious ahead of Friday’s U.S. Non-Farm Payrolls Report. Earlier this morning the Dollar showed little reaction to the European Central Bank’s decision to hold interest rates steady and a slight drop in U.S. Weekly Initial Claims.

Jobless claims remained a concern among investors because they remain at a high level. This is an indication that the U.S. economy is cooling while fueling worries that the recovery may not be sustained if private firms continue to refrain from hiring new workers.

The Euro is holding steady following the ECB’s decision to hold interest rates steady. The market had a positive reaction to the comment from ECB President Trichet who said the recovery “should proceed at a moderate pace”.

Mortgage issues are helping to put pressure on the British Pound. A choppy stock market is leading to mixed results in the commodity-linked currencies. The New Zealand Dollar is trading better, but the Australian and Canadian Dollars are trading flat which may be a sign that Wednesday’s strong rallies may have been overdone.

Although the Dollar is down this week, many large traders and institutions have been on the sidelines due to tomorrow’s employment report and Monday’s U.S. Labor Day holiday leading to speculation that this week’s action was due to thin trading conditions.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Euro Traders Cautious; Trichet Calls for Moderate Recovery

jhyerczyk@yahoo.com (James A. Hyerczyk) — Thu, 02 Sep 2010 13:27:00 GMT

This morning the European Central Bank left interest rates unchanged as expected. ECB President helped move the Euro a little higher by stating that recent data has been stronger than expected partly due to temporary factors, but the ECB still expects the Euro Zone’s economic recovery to be moderate and uneven.

The Euro had a pretty uneventful night after Wednesday’s strong surge. The market is currently trading inside yesterday’s range with traders taking a cautious approach ahead of Friday’s U.S. Non-Farm Payrolls Report.

Should the Euro begin to weaken throughout the day, look for it to straddle a minor retracement zone at 1.2793 to 1.2754.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Euro's Strong Finish Indicates More Upside Likely

jhyerczyk@yahoo.com (James A. Hyerczyk) — Wed, 01 Sep 2010 21:10:00 GMT

The strong rallies in the Euro and the three major risk-linked currencies finished sharply higher and near their highs while showing no signs of a letup into the close. Whether it was short-covering or fresh buying, investors celebrated good global economic news by driving the U.S. Dollar lower and most major markets higher.

Upside momentum is expected to continue overnight, but traders will have to face a decision about whether to keep up this robust pace so close to the U.S. Non-Farm Payrolls Report on Friday. In addition, investors get a chance to assess more U.S. economic data on Thursday including weekly initial claims, Factory Orders and Pending Home Sales.

The Euro surged to the upside overnight, taking out the last swing top at 1.2779 and changing the main trend to up on the daily chart. Based on the range of 1.3334 to 1.2587, the EUR USD is now set up for a possible test of the retracement zone of this range at 1.2960 to 1.3049. A downtrending Gann angle from the 1.3334 top is at 1.2974, suggesting the formation of a resistance cluster at 1.2960 to 1.2974 today and 1.2954 to 1.2960 on Thursday.

The initial catalyst behind the surge in the Euro overnight was the bullish PMI news from China and the better than expected growth report from Australia. Both news pieces helped rally Asian stocks leading to greater demand for risk and subsequently the Euro.

News that the Euro Zone manufacturing recovery hit a six-month low failed to halt this morning’s advance. Overnight it was reported that the manufacturing purchasing managers’ index slowed to 55.1, with “moderated” growth both in output and new orders.

According to the report, the hardest hit country in the Euro Zone was Greece which is still trying to recover from its financial crisis from the Spring. Germany and France posted “strong growth”. The report also showed that the improvements were “still centered on Germany, the Netherlands and Austria”. The recovery was “comparatively modest” in Italy and Spain.

Although this report suggests that the region is cooling, the strength in Germany and France should be noted. The weaker countries are likely to bring up this fact at the next European Central Bank meeting on September 3. ECB members want to be assured that the Euro Region as a whole recovers at a similar pace so that the stronger countries do not dominate the weaker economies.

Despite the change in trend to the upside in the Euro, momentum must continue to remain strong to drive this market to the objective minimum objective of 1.2960 over the near-term.

The Dollar declined against the Euro and commodity-linked currencies throughout the New York session after U.S. manufacturing activity showed a surprise improvement last month. This news came unexpectedly and indicated that despite calls for a double-dip recession, there were identifiable areas of strength in the economy.

Wednesday’s down move in the Dollar began last night following the release of stronger economic data from Australia and China. Investor appetite for risk was whetted with the news, triggering a sharp rally in the Australian, New Zealand and Canadian Dollars.

Earlier this morning traders shrugged off a weaker than expected ADP employment report, signaling that the focus would be on growth. The ADP number suggested that Friday’s U.S. Non-Farm Payrolls Report will likely be in line with pre-report estimates of a 106K to 120K jobs lost and an increase in the Unemployment Rate to 9.6%.

Technically the EUR USD changed the trend on the daily chart to up on the move through 1.2779. This sets up the strong possibility of a retracement to a major 50% level at 1.2960. Upside momentum has to continue on Thursday to keep this forecast in line. Some traders doubt that the rally was triggered by real buyers because of thin pre-report and pre-holiday trading.

The AUD USD was a big mover on Thursday, posting a strong gain of over 2.00%. The rally also exceeded a retracement zone at .8995 to .9049. This move sets up a potential rally to a downtrending Gann angle at .9131.

Australian Bonds sold off following the report of a surge in Australian GDP by 1.2 percent. This was the most rapid pace in three years and led to call for an interest rate hike by the Reserve Bank of Australia at its next meeting on September 7.

The surge in the Australian economy also spilled over to the New Zealand Dollar, which remained in a downtrend, but was threatening to break out above the last swing top at .7191.

Finally, the Canadian Dollar benefited from higher crude oil, a better outlook for the U.S. economy and appetite for risk. Despite the bullishness of Wednesday’s trade, look for the USD CAD to continue to straddle 50% of the main range of .9929 to 1.0853.

The strong closes in all the major foreign currencies indicates that there may be a follow-through rally on Thursday, but there is still doubt among some traders whether the rallies today in the majors were real buying or weak shorts getting driven out of the market.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

U.S. Economic Data Fuels Surge in Euro, Commodity-Linked Currencies

jhyerczyk@yahoo.com (James A. Hyerczyk) — Wed, 01 Sep 2010 18:51:00 GMT

The Dollar declined against the Euro and commodity-linked currencies after U.S. manufacturing activity showed a surprise improvement last month. This news came unexpectedly and indicated that despite calls for a double-dip recession, there were identifiable areas of strength in the economy.

Today’s down move in the Dollar began last night following the release of stronger economic data from Australia and China. Investor appetite for risk was whetted with the news, triggering a sharp rally in the Australian, New Zealand and Canadian Dollars.

Earlier this morning traders shrugged off a weaker than expected ADP employment report, signaling that the focus would be on growth. The ADP number suggested that Friday’s U.S. Non-Farm Payrolls Report will likely be in line with pre-report estimates of 120K jobs loss and an increase in the Unemployment Rate to 9.6%.

Technically the EUR USD changed the trend on the daily chart to up on the move through 1.2779. This sets up the strong possibility of a retracement to a major 50% level at 1.2960.

The AUD USD is a big mover at the mid-session, posting a strong 1.96% gain. The rally also exceeded a retracement zone at .8995 to .9049. This move sets up a potential rally to a downtrending Gann angle at .9131.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Euro Changes Trend to Up; Set-up for Rally to 1.2960

jhyerczyk@yahoo.com (James A. Hyerczyk) — Wed, 01 Sep 2010 11:12:00 GMT

The Euro surged to the upside overnight, taking out the last swing top at 1.2779 and changing the main trend to up on the daily chart. Based on the range of 1.3334 to 1.2587, the EUR USD is now set up for a possible test of the retracement zone of this range at 1.2960 to 1.3049. A downtrending Gann angle from the 1.3334 top is at 1.2974, suggesting the formation of a resistance cluster at 1.2960 to 1.2974 today and 1.2954 to 1.2960 on Thursday.

The initial catalyst behind the surge in the Euro overnight was the bullish PMI news from China and the better than expected growth report from Australia. Both news pieces helped rally Asian stocks leading to greater demand for risk and subsequently the Euro.

News that the Euro Zone manufacturing recovery hit a six-month low failed to halt this morning’s advance. Overnight it was reported that the manufacturing purchasing managers’ index slowed to 55.1, with “moderated” growth both in output and new orders.

According to the report, the hardest hit country in the Euro Zone was Greece which is still trying to recover from its financial crisis from the Spring. Germany and France posted “strong growth”. The report also showed that the improvements were “still centered on Germany, the Netherlands and Austria”. The recovery was “comparatively modest” in Italy and Spain.

Although this report suggests that the region is cooling, the strength in Germany and France should be noted. The weaker countries are likely to bring up this fact at the next European Central Bank meeting on September 3. ECB members want to be assured that the Euro Region as a whole recovers at a similar pace so that the stronger countries do not dominate the weaker economies.

Despite the change in trend to the upside in the Euro, momentum must continue to remain strong to drive this market to the objective minimum objective of 1.2960 over the near-term. Today’s ADP Employment report should set the tone of the New York session early. Pre-report guesses are for an increase of 17,000 jobs. A weaker than expected number could raise concerns about the U.S. recovery, driving investors into the lower yielding U.S. Dollar while weakening the Euro.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Economic Growth Drives Aussie Dollar into Retracement Level

jhyerczyk@yahoo.com (James A. Hyerczyk) — Wed, 01 Sep 2010 09:47:00 GMT

The Australian Dollar is up close to 1.70% this morning after the Australian Bureau of Statistics said gross domestic product rose 1.2% on a seasonally adjusted basis in the second quarter ending in June. Economists had been looking for a growth rate of 0.9%.
This robust showing in the economy showed that the nation’s economy grew at the fastest pace in three years last quarter. The strength in the Aussie came on the heels of strong equity rallies in Asia as investors starving for good economic news, drove up demand for higher yielding currencies.

In addition to the good Australian economic data, China’s Purchasing Managers’ Index rose 51.7 in August from 51.2 in July. A reading above 50 shows an expansion. Australia benefited from the news because it is China’s largest trading partner.

During this week’s thin trading conditions, the news is considered to be more positive than usual and investors may be overreacting to this short-term bullish news which is driving up investor appetite for risk.

While the news is driving up the Aussie overnight, gains could be limited if the ADP employment outlook, expected to be reported later this morning, comes out worse than forecast. Traders want to see a strong trend developing in the global economy. This means they are looking for today’s U.S. economic reports to build on the friendly data out of Australia and China. Economists are calling for the ADP report to show that 15,000 jobs were added to the U.S. economy.

Australian government bonds fell on the good news about the economy as traders priced in the possibility of an interest rate hike by the Reserve Bank of Australia at its next meeting on September 7.

Technically, the AUD USD is testing the Fibonacci retracement level of the .9221 to .8770 range at .9049. This currency pair is also testing a downtrending Gann angle at .9041, creating a minor resistance cluster at .9041 to .9049. Continued strength could drive this market to .9176.

Remember that this morning’s rally could die if investors cannot sustain its bullishness throughout the trading session. Gains could be limited if U.S. investors decide not to chase the equity indices higher. This weakness may be caused by bearish U.S. economic reports or a general lack of conviction to the long side ahead of Friday’s Non-Farm Payrolls Report.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Economic Data Creates Interesting Euro Session

jhyerczyk@yahoo.com (James A. Hyerczyk) — Wed, 01 Sep 2010 06:48:00 GMT

Thin trading conditions and economic reports led to a “roller-coaster” type trading session in the Euro on Tuesday. The European single currency rallied on a better than expected German jobs report, topped on strong U.S. Consumer Confidence data then, after trading sideways throughout the mid-session, drifted lower into the close following the release of the Fed minutes.

The Euro gained strength overnight after it was reported that Germany’s jobless numbers fell less than economist estimates. The market reacted as if the number was bullish instead of just slightly lower than the pre-report guess. Technically the Euro found support last night slightly in front of last week’s bottom at 1.2587. It rallied when U.S. stocks opened higher and sentiment shifted toward risk.

At 9 am CDT the Euro topped following a better than expected Consumer Confidence Report. The actual number of 53.5 blew out the consensus figure of 50.0. The surprise nature of this number drove investors back into the Dollar. At this point the Euro broke from 1.2742 to 1.2680 before settling into a trading range.

After a quick rally to 1.2701, the EUR USD began to break following the release of the Fed’s Minutes from its last FOMC meeting. This market broke hard into 1.2661 as the report indicated the Fed is ready to take appropriate action should the U.S. economy deteriorate “appreciably”. The willingness of the Fed to consider taking additional steps to provide more support if the economy weakens further drove traders into the safety of the lower-yielding currencies, thus weakening the Euro.

Technically the Euro is in a downtrend, but the recent sideways action has this market poised to move sharply in either direction. A break to the downside is likely to run stops under the last swing bottom at 1.2587 all the way to the Fibonacci level at 1.2433.

A breakout over 1.2779 will change the main trend to up and could ignite the start of a rally to 1.2960.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Euro Set Up for Volatile Move

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 31 Aug 2010 17:40:00 GMT

This morning the Euro held the swing bottom at 1.2587 after Germany reported better than expected jobs data. Upside momentum will have to strengthen to take out the swing top at 1.2779 to turn the main trend up on the daily chart. Look for intraday updates on my Facebook page, The Forex Pattern, Price & Time Report.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

GBP USD Break Gets Serious

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 31 Aug 2010 17:38:00 GMT

Today’s break in the GBP USD may be the start of the break to 1.5113 which I have been looking for since the recent top was put in. The move to 1.5113 will complete the 50% correction of the 1.4229 to 1.5997 range.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Will 1.0130 Hold Dollar/Swiss?

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 31 Aug 2010 17:35:00 GMT

The Dollar/Swiss may not stop at the January bottom at 1.0130. Downside momentum seems to be indicating heavy selling pressure.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Equity Rally Stalls USD JPY Break

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 31 Aug 2010 17:30:00 GMT

The stock market rally seems to have put in a temporary halt to the weakness in the USD JPY. The challenge to traders will be to time the shift when traders start selling the Yen on stock market strength. In other words, is the carry trade dead or just waiting to be revived?

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

USD CAD Waiting to Breakout

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 31 Aug 2010 17:28:00 GMT

Going back to June, three tops at 1.0678, 1.0676 and 1.0667 have held back the USD CAD. A strong decline in the equity markets could trigger a breakout over these levels.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Aussie Waiting for Stocks to Make Move

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 31 Aug 2010 17:26:00 GMT

The AUD USD confirmed Monday’s minor reversal top but the rally in the stock market triggered an intra-day short-covering bounce. Don’t expect much downside action unless the equity market weakens.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Kiwi Testing 50% Level

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 31 Aug 2010 17:24:00 GMT

The NZD USD is testing a major 50% level at .6975. The old bottom at .6947 is still intact. The next downside target is .6879 if both levels fail to hold.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Forex Markets Unclear about Today's Theme

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 31 Aug 2010 17:19:00 GMT

In what is most likely a reaction to the thin trading conditions, the Forex markets seem to be indicating different opinions. The Euro is holding steady because of better German jobs data. The British Pound is weakening because of uncertainty about the strength of the recovery.

The risk-linked Canadian Dollar, Australian Dollar and New Zealand Dollar are trading off their lows because of the stronger equity markets. Despite stronger stock prices, the Japanese Yen is trading higher as traders continue to punish the Dollar/Yen because they believe the Bank of Japan and the government will do little to weaken their currency.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Euro Rallies on Better German Employment News

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 31 Aug 2010 13:00:00 GMT

It seems we’ve hit that point in the economic cycle where traders celebrate the quality of the analyst guess. We saw it last week when U.S. GDP fell to 1.6% but stocks rallied initially because the pre-report guess was 1.3%. This morning the Euro is rallying because Germany’s federal labor office said the seasonally adjusted number of unemployed workers fell by 17,000 in August. Economists had forecast a decrease of 20,000 in the number of people without jobs.

I suppose you can build a case for calling this report a steady improvement in the labor market which suggests that the German economy is improving but at a slower pace.

Actually when a market rallies because the report was better than the pre-report estimate, it doesn’t necessarily always mean new buyers came in. Many times investors are merely adjusting their positions triggering a short-covering rally. To professional traders it’s not always about being right or wrong about the market as much as it is having the right size on in order to manage the risk.

On the better than expected news this morning the EUR USD rallied, triggering a short-covering rally in front of the previous main bottom at 1.2587. Last night’s sell-off created a swing top at 1.2779, helping to form a minor range of 1.2587 to 1.2779. The main trend will turn to up on a trade through 1.2779. The downtrend will resume on a trade through 1.2587.

In the bigger picture, the main range is 1.1876 to 1.3334. This range has created a major retracement zone at 1.2605 to 1.2433. The charts indicate that a failure to hold the 50% level at 1.2605 should trigger a break to the .618 retracement price at 1.2433. An uptrending Gann angle at 1.2486 could slow down the rate of the descent should this market find selling pressure.

It’s a little premature to talk about the long-side of the Euro if you are a trend-trader until 1.2779 is taken out. If this occurs then the first upside target will be 1.2961 to 1.3049. Counter-trend traders may have stepped into the long-side this morning. The general rule for counter-trend traders is “find an exit first before entering”, and based on this morning’s activity, this exit may have been identified as 1.2587.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Dollar/Yen breaking Despite BoJ Action

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 30 Aug 2010 17:42:00 GMT

The big news story today involves the Japanese Yen. Early in the trading session, the Bank of Japan announced that it would expand its current 20 trillion Yen quantitative easing program to six months from its current three-month time frame. At the same time it increased the amount of funds available by 10 trillion Yen.

The BoJ expected this action to weaken the Yen instead it’s the USD JPY that is trading sharply lower. Traders are reacting as if they had expected the move or were waiting for something more intense.

Last night the Dollar/Yen stopped just short of turning the main trend on the daily chart to up with a move through 85.91. The subsequent break identifies the importance of this price.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

British Pound Vulnerable to Downside

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 30 Aug 2010 17:40:00 GMT

The GBP USD is trading lower and in the middle of nowhere on the daily chart. It’s hard to describe what traders are trying to do based on the current chart pattern. What is clear, however, is that a break through the recent low at 1.5371 is likely to trigger a break all the way down to the major 50% price level at 1.5113.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Euro Feeling Pressure; Downside Target 1.2605

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 30 Aug 2010 17:38:00 GMT

The EUR USD is feeling pressure after failing to rally following a test of a 50% level at 1.2754. The key area to watch is 1.2605 to 1.2687. A break through this zone will reaffirm the downtrend and likely trigger an acceleration to the Fibonacci retracement level at 1.2433.

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Falling Stock Market Contributing to U.S. Dollar's Strength

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 30 Aug 2010 17:36:00 GMT

The U.S. Dollar is trading higher against most major currencies at the mid-session. The falling stock markets are contributing to the selling pressure in the higher-yielding currencies while a move to weaken the Japanese Yen has drawn the opposite reaction by traders.

U.S. stocks extended losses throughout the session after the release of U.S. income and consumption data showed meager advances in income and consumer spending. Increased M & A activity and a stock buyback by HP also failed to generate any interest in the long side of the market.

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Australian Dollar Finishes Retracement

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 30 Aug 2010 13:45:00 GMT

The AUD USD opening sharply higher last night and rallied in a continuation of last week’s strong retracement rally. Sellers stepped in at the retracement zone at .8995 to .9049. The subsequent sell-off following the test of this zone indicates that expected rally following last week’s closing price reversal bottom pattern has been completed.

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Euro Losing Ground against Dollar; Risk Off the Table

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 30 Aug 2010 13:43:00 GMT

With risk sentiment off the board this morning, the Euro is losing ground to the Dollar. Last week the EUR USD found support on a major 50% support level at 1.2605. The successful test of this level triggered a short-covering rally into a minor retracement zone at 1.2754 to 1.2793. The market is backing off to the downside after a successful test of this level, leading to speculation that a test of the swing bottom at 1.2587 is likely. The failure to hold this level could trigger a further decline to the .618 retracement level at 1.2433.

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BoJ Easing Fails to Weaken Japanese Yen

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 30 Aug 2010 13:40:00 GMT

The U.S. Dollar is strengthening this morning after the Bank of Japan decided to invoke an emergency easing plan. The BoJ avoided an intervention but instead decided to provide liquidity in an attempt to weaken its currency. The plan includes expanding its current 20 trillion Yen quantitative easing program to six-months from its current three-month time frame. It also increased the amount of funds available by 10 trillion Yen.

Forex traders reacted to this plan by purchasing the Dollar against most major currencies in what can best be described as a flight-to-safety rally.

Technically, after an attempt to breakout to the upside through the last swing top at 85.91, the USD JPY is now trading sharply lower. The last main bottom at 83.59 seems safe at this time, but could be challenged later in the day if 84.75 cannot hold today’s break.

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Australian Dollar Could Test .9049 by August 31

jhyerczyk@yahoo.com (James A. Hyerczyk) — Fri, 27 Aug 2010 17:35:00 GMT

Higher yielding currencies are trading better at the mid-session, driven up by greater demand for risky assets. This morning’s better than expected U.S. GDP report helped ignite the initial rally, but it was positive comments from Fed Chairman Bernanke which triggered the second leg up.

Technically the rally in the Australian Dollar was setup on Wednesday with its closing price reversal bottom pattern. This bottom at .8770 helped form a range with the main top at .9221. This also helped create a retracement zone at .8995 to .9049. This retracement zone is the first upside target of the current rally.

Today’s rally was also triggered by a technical breakout through a key downtrending angle from the .9221 top at .8921 today. Based on my price and time calculations the next major price cluster is at .9049 on August 31.

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Risk Trade Back on After Weekly Jobs Data Fails to Disappoint

jhyerczyk@yahoo.com (James A. Hyerczyk) — Thu, 26 Aug 2010 14:24:00 GMT

The risk trade in the Forex markets is back on today after U.S. Weekly Jobs data failed to disappoint investors. What this means is that the jobs data was not actually good, but it was not as bad as last week, leading to a ray of optimism this morning. Economists and analysts have readjusted their outlooks for the jobs market which probably means that weekly claims have to drop below 450,000 before the markets get really excited.

Initially the weekly claims number weakened the economically sensitive British Pound and Euro while strengthening the riskier Australian Dollar, New Zealand Dollar and Canadian Dollar. Since shortly after the release of the report the U.S. Dollar has weakened against all major currencies.

The rallies in the commodity-linked currencies started on Wednesday following a shift out of Treasury Bonds and into equities. Investors seemed to shrug off back housing market news because of oversold technical conditions in the stock market and overbought technical conditions in the Treasury markets.

Whether equities can hold on to their gains is still the question. Yesterday’s reversal bottom did not change the trend which leads me to believe that the moves in the Aussie, Kiwi and Loonie were most likely short-covering.

Trading could be light today because Fed Chairman Bernanke gives a speech tomorrow morning at the central banker’s conference in Jackson Hole, Wyoming. His speech is likely to be market moving because it includes a Q&A session which means reporters may get to ask tough questions. Investors want clarity and conviction by the Fed at this time to combat the growing “crisis in confidence”.

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Euro Still Holding Key Level at 1.2605

jhyerczyk@yahoo.com (James A. Hyerczyk) — Wed, 25 Aug 2010 17:18:00 GMT

The Euro is trading in a tight range after holding a test of a major 50% level at 1.2605. Trading has dried up after the release of two worse than expected U.S. economic reports this morning. Traders may be looking forward to tomorrow’s keynote speech by Fed Chairman Ben Bernanke at the central banker’s conference in Jackson Hole, Wyoming.

This morning, the U.S. reported a worse than expected Durable Goods number. This triggered a higher spike on the chart from 1.2611 to 1.2668. Later in the morning, U.S. New Home Sales were reported lower than expected. The initial move was to the upside, but sellers quickly drove the Euro down from the top as money began to shift out of Treasurys and into equities. The subsequent break took the market to 1.2620, holding the key 50% level at 1.2605.

Technically, the action looks positive for the Euro. On Tuesday this market made a daily closing price reversal bottom, indicating buying interest. The current developing pattern suggests a possible 2 to 3 day rally back to 1.2754 to 1.2793. All of this is possible as long as the market can hold above 1.2605. A break through this level could trigger an acceleration to the downside to 1.2433.

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GBP USD Trading Steady under Key Resistance Zone

jhyerczyk@yahoo.com (James A. Hyerczyk) — Wed, 25 Aug 2010 13:02:00 GMT

The GBP USD is trading steady to better this morning following the release of a worse than expected U.S. Durable Goods report.

Since topping at 1.5997 on August 6, the Pound/Dollar has been walking down a downtrending Gann angle at 1.5477 this morning.

Based on the July/August rally from 1.5123 to 1.5997, a new retracement zone has been created at 1.5560 to 1.5457.

Combined with the Gann angle, this creates a resistance cluster at 1.5457 to 1.5477. As long as the market remains under this cluster look for downside pressure.

The daily chart indicates there is plenty of room to the downside with a major 50% level at 1.5113 the next likely downside target.

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Euro Spikes on Durable Goods Data; Must Hold 1.2605

jhyerczyk@yahoo.com (James A. Hyerczyk) — Wed, 25 Aug 2010 12:48:00 GMT

News that Durable Goods rose smaller than expected helped trigger an intraday spike in the Euro. U.S. equities broke on the news while Treasury yields fell.

Technically the Euro found support at a major 50% price level at 1.2605. The market needs to hold this level and begin to build a support base in order to feed on Tuesday’s bullish close. A failure at this level could trigger an acceleration to 1.2433

Yesterday’s closing price reversal bottom pattern has the potential to generate a 2 to 3 day retracement to 1.2754 to 1.2793. A downtrending Gann angle at 1.2814 is also a potential target. The potential rally is not designed to change the trend but force weaker traders to cover shorts. The main trend will turn to up if 1.2921 is violated.

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Forex - British Pound Regains Fibonacci Level

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 24 Aug 2010 17:37:00 GMT

This morning the GBP USD continued its downtrend by breaking a minor .618 retracement level at 1.5457. Buyer stepped in to rally the Sterling, but the buying power wasn’t strong enough to post a daily closing price reversal bottom. At the midsession, the British Pound is finding resistance on a downtrending Gann angle from the 1.5997 top at 1.5757.

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Forex - Aussie Could Test 87.17

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 24 Aug 2010 17:35:00 GMT

The AUD USD is under pressure at the mid-session. Traders are dumping risky assets this morning in anticipation of a weaker global economy. Downside momentum could drive this market into an uptrending 50% Gann angle at .87.17.

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Forex - Euro Rallies after Testing Major 50% Level

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 24 Aug 2010 17:33:00 GMT

The Euro is trading higher at the mid-session after testing a major 50% level this morning. Technically the market is trading inside of the 1.1876 to 1.3334 range. The mid-point of this range is 1.2605, the Fibonacci retracement price is 1.2433.

This morning the market tested 1.2605 and penetrated it slightly before regaining it slightly after the U.S. opening. At the mid-session, the EUR USD is trading higher and in a position to post a daily closing price reversal bottom. Should the market retrace higher, gains could be limited by a downtrending Gann angle at 1.2854.

All is not rosy however for the Euro. If sellers continue to exert pressure and 1.2605 fails to hold on the next retest, then look for the market to continue to decline to 1.2433.

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USD JPY Breaks Range, Plunges to New Low

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 24 Aug 2010 11:59:00 GMT

After sitting inside of a range for six days while waiting for a decision from the Japanese government and the Bank of Japan regarding a possible intervention, the USD JPY finally broke to a new low for the year. Volatility which had been compressed while the market remained inside the range expanded.

Traders ignored strong words from Japanese Finance Minister Yoshihiko Noda sending a signal that they believe the Japanese government and the Bank of Japan were not ready to back up those words with direct market action.

Noda said at a new conference that the recent moves in the Japanese Yen are clearly one-sided and that disorderly moves can be harmful to economic stability. In the recent past traders would have responded to this “verbal intervention” by covering short Dollar/Yen positions, but this time, having heard this language before, decided to ignore the comments and react to growing global demand for safer lower-yielding assets instead.

This morning the markets are reacting as if it is business as usual. Investors are shedding risky assets and placing the proceeds into the lower yielding Japanese Yen for safe-keeping. This is driving the Yen higher. There doesn’t seem to be any disruptive trading or overt speculation at this time. This is probably frustrating to Japanese officials who seem to believe that there is disorder in the markets.

While it may be true that the high priced Yen can have a detrimental effect on the economy, nothing is going to stop the decline if investor sentiment is triggering a shift out of risky assets.

Japan has not intervened in the currency markets since 2004. At that time it sold 35 trillion Yen in 15 months through March 2004. The markets today are a little more sophisticated. Institutions and hedge funds have the power to combat a central bank’s intervention which is probably why Japanese officials are hesitant at this time to make such a move.

If Japan intervenes and the market absorbs the great influx of Yen supply then the action will have no long-term effect on valuation and only serve to put more Yen into the open market.

Another reason why a successful intervention is not likely at this time, is that in order to work, an intervention has to have the cooperation of other central banks. With all nations seemingly battling economic woes of their own, this cooperation doesn’t seem forthcoming at this time.

Technically, the USD JPY main trend is down. The trend will change to up on a move through 85.91, but this seems unlikely at this time since the old bottoms at 84.73 and 84.89 are likely to become new resistance and limit gains.

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Despite Low Volume, Economic Uncertainty Drives Dollar Higher

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 23 Aug 2010 20:36:00 GMT

The U.S. Dollar finished higher against most currencies on Monday, driven by a weak outlook for the global economic recovery.

The EUR USD fell further on Monday as sentiment shifted away from risky assets. Despite the light volume and low volatility, sellers dominated the market all day. The weak close has this market in a position to test a major 50% price level at 1.2605. A failure to hold this level means a break to 1.2433 is likely.

Without any major economic reports until late in the session and several large trading groups out of the markets until after Labor Day, volatility may be down throughout the week. On Thursday, Bernanke gives a speech at the central bankers gathering at Jackson Hole, WY. This speech has the potential to move the markets depending on what he says and what he doesn’t say.

After an early attempt to breakout to the upside, the GBP USD ran into sellers who quickly pushed this pair to the bearside of a pair of Gann angles. Fundamentally, traders are concerned the new austerity measures will slow down the recovery.

At the close the British Pound is trading on the bear side of an uptrending Gann angle at 1.5569 and on the bear side of a downtrending Gann angle at 1.5557. This price cluster was pierced early in the session, but the move did not attract any follow-through buying.

Although the Gann angles are indicating developing weakness, it looks as if an acceleration to the downside is likely to start following a close under a minor .618 level at 1.5457. Once this area is penetrated, the charts indicate the market can go into a free fall because the next major downside level is 1.5113.

The USD JPY remains inside the main range of 84.73 to 86.37, but below the mid-point of this range at 85.55, indicating impending weakness. The fact that we’ve sat inside this range for six trading sessions also means to expect volatility. The only problem is no one is sure which way the market will move although traders appear to be leaning toward the short side.

Investors have been factoring in the possibility of an intervention by the Bank of Japan, but so far no such decision has been forthcoming. This is creating the uncertainty in the market. This morning the Japanese government said it would work with the BoJ, but this came as no surprise to veteran investors who truly believe the government has had its hand in just about every major policy decision. Nevertheless, investors lighten up bets calling for an intervention as flight to safety buying of the Yen took over once again.

The Australian Dollar gapped lower overnight due to political uncertainty stemming from unclear election results over the week-end and the possibility of a hung parliament. Weak shorts most likely lightened up their positions on the news. The lack of follow-through to the downside triggered a short-covering rally into the mid-session, but this rally also failed before the market traded lower into the close.

Traders are a little confused as to which side of the market to take. Technically, this market could rally back to .9030 where it will most likely be sold. The charts also indicate there is plenty of room to the downside, with a 50% level at .8644, a likely target.

In my opinion the traders are waiting to see if a compromise can be reached before taking a side. This is how the U.K. elections were settled, which led to almost immediate stability in the government, triggering a long-term rally. Traders are hoping a similar solution will be reached in Australia.

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GBP USD Chart Looking Weak

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 23 Aug 2010 17:51:00 GMT

After an early attempt to breakout to the upside, the GBP USD ran into sellers who quickly pushed this pair to the bearside of a pair of Gann angles. Fundamentally, traders are concerned the new austerity measures will slow down the recovery.

At the mid-session the British Pound is trading on the bear side of an uptrending Gann angle at 1.5569 and on the bear side of a downtrending Gann angle at 1.5557. This price cluster was pierced early in the session, but the move did not attract any follow-through buying.

Although the Gann angles are indicating developing weakness, it looks as if an acceleration to the downside is likely to start following a close under a minor .618 level at 1.5457. Once this area is penetrated, the charts indicate the market can go into a free fall because the next major downside level is 1.5113.

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Forex - AUD USD Bucks Lower Opening; Moves Higher

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 23 Aug 2010 12:51:00 GMT

The AUD USD reversed losses from the opening to move higher. The Aussie opened lower after this week-ends election results could not produce a clear-cur winner, leading to a hung Parliament. Concerned traders gapped the market lower in what appears to be liquidation of weak shorts. The lack of follow-through to the downside, triggered a short-covering rally which turned the market higher.

Technically, this morning’s rally in the Aussie helped confirm Friday’s daily closing price reversal bottom. This pattern suggests a possible 2 to 3 day rally with .9030 the next objective. A downtrending Gann angle at .9001 could limit today’s gains.

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Forex and Futures Recap and Outlook for Week-Ending August 20, 2010

jhyerczyk@yahoo.com (James A. Hyerczyk) — Sat, 21 Aug 2010 16:31:00 GMT

Here is a video of my Forex and Futures Market Recap and Outlook for the Week-Ending August 29, 2010. This video is courtesy of ForexTV.com.

In the Forex markets, the focus will be on the Japanese Yen. Will there be an intervention or not? The Dollar/Yen has been wound pretty tight so expect volatility.

Late in the week, the U.S. Dollar Gross Domestic Product Report will be the highlight. This report should be a market mover.

In the Futures markets, I believe the September Treasury Bonds will be featured next week because of the way it closed on Friday. Talk of a potential "Bubble" developing has made speculators nervous, but will traditional Treasury investors be rattled by this threat? The daily closing price reversal top on Friday has the potential to trigger a sizeable break.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Forex - Yen Consolidating; Volatility Imminent

jhyerczyk@yahoo.com (James A. Hyerczyk) — Fri, 20 Aug 2010 22:28:00 GMT

The USD JPY is still consolidating inside of the 84.73 to 86.37 range. The market appears to be forming a support base as government and Bank of Japan officials try to decide the effect of the high priced Yen on the economy and whether to intervene. This market is expected to remain inside of a tight range until this decision is reached. This decision has the potential to exert a tremendous amount of influence on the market which is likely to lead to high volatility next week. In particular, a breakout to the upside could produce some tremendous gains as shorts will no doubt pay anything to get out of their positions.

The U.S. Dollar traded higher across the board under light trading conditions on Friday. Trader sentiment continued to remain locked around risk aversion as uncertainty over the strength of the global economy prevailed.

The British Pound broke minor 50% support at 1.5560 and an uptrending long-term Gann angle at 1.5549. This move tripped stops and caused a soft break into a .618 support level at 1.5457 before settling into a range.

It was reported this week that U.K. retail sales were stronger than expected, but this news wasn’t enough to sustain the rally. Concerns about inflation and the effects of new taxes and spending cuts on the economy continue to weigh on investors. Earlier in the week, the Bank of England minutes showed that the Monetary Policy Committee voted 8 to 1 to support this month’s interest rate decision. The minutes also showed that inflation was discussed as well as a rate hike. The BoE seems to believe that inflation will fall back below the target rate of 2%, if left alone, by 2012. The central bank is basing this assessment on its evaluation of data which it interprets to mean that the current high inflation rate has been caused by temporary events.

The Euro reaffirmed its downtrend when it broke a swing bottom at 1.2732. A new main top on the daily chart was formed at 1.2921. The next objective is the major retracement zone at 1.2605 to 1.2433. This area represents a retracement of the 1.1876 to 1.3334 range.

Talk surrounding the strength of the Euro Zone recovery helped pressure the Euro but the most bearish influence was comments fromEuropean Central Bank council member Weber who said he thought the ECB should wait until the first quarter next year before considering an exit strategy. This ignited a huge sell-off in the Euro as traders read the comments to mean the Euro Zone economy was not as strong as perceived.

Flight to safety buying is driving the USD CHF higher. Former bottoms on the weekly chart are providing some light support, but the daily chart suggests the market should continue to remain under pressure. A series of tops at 1.0675, 1.0640 and 1.0626 are major resistance. The trend will remain down on the daily chart until these levels are violated.

The USD CAD is still ping-ponging between retracement levels at 1.0282 to 1.0579. Continue to play these levels until the market breaks out in either direction. The Canadian economy appears to be stuck because of the influence of the weakening U.S. economy. Uncertainty about future growth is cooling off the Canadian economy, leading to speculation that the Bank of Canada will leave interest rates at 0.75%.

Election concerns and the dumping of risky assets pressured the Australian Dollar early in the session before it stabilized. The trend is down but the chart indicates there is room to break to .8644 over the near-term if sellers step back in after the week-end.

Polls are showing the election is too close to call with several analysts calling for a hung parliament. Taxes, spending cuts and the environment are key issues to be decided with this election.

The trend is down in the New Zealand Dollar. 7191 is new main top on the daily chart. A trade through this level will turn the main trend up. Downside momentum is slowing today, but could pick up again if sellers show up. The chart indicates room to break to the .6977 level.

The Dollar Index finished the week on its high. Overall the shift in sentiment toward risk aversion triggered this week’s rally. Early next week the Dollar should react to U.S. housing data. At the end of the week, the GDP Second Estimate should have a huge influence on the direction of the Greenback. The consensus is calling for growth of 1.3% versus 2.4% previously.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

U.S. Dollar Up Across the Board; Euro getting Pounded

jhyerczyk@yahoo.com (James A. Hyerczyk) — Fri, 20 Aug 2010 16:58:00 GMT

The U.S. Dollar is trading higher across the board under light trading conditions. Trader sentiment continues to remain locked around risk aversion as uncertainty over the strength of the global economy prevails.

The Euro reaffirmed its downtrend when it broke a swing bottom at 1.2732. A new main top on the daily chart was formed at 1.2921. The next objective is the major retracement zone at 1.2605 to 1.2433. This area represents a retracement of the 1.1876 to 1.3334 range.

The British Pound broke minor 50% support at 1.5560 and an uptrending long-term Gann angle at 1.5549. This move tripped stops and a soft break into a .618 support level at 1.5457 before settling into a range.

Flight to safety buying is driving the USD CHF higher. Former bottoms on the weekly chart are providing some light support, but the daily chart suggests the market should continue to remain under pressure. A series of tops at 1.0675, 1.0640 and 1.0626 are major resistance. The trend will remain down on the daily chart until these levels are violated.

The USD JPY is still consolidating inside of the 84.73 to 86.37 range. The market appears to be forming a support base as government and Bank of Japan officials try to decide the effect of the high priced Yen on the economy and whether to intervene.

The USD CAD is still ping-ponging between retracement levels at 1.0282 to 1.0579. Continue to play these levels until the market breaks out in either direction.

Election concerns and the dumping of risky assets pressured the Australian Dollar early in the session before it stabilized. The trend is down but the chart indicates there is room to break to .8644 over the near-term if sellers step back in after the week-end.

The trend is down in the New Zealand Dollar. 7191 is new main top on the daily chart. A trade through this level will turn the main trend up. Downside momentum is slowing today, but could pick up again if sellers show up. The chart indicates room to break to the .6977 level.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Investors Shedding Risk; Pressure on Commodity-Linked Currencies

jhyerczyk@yahoo.com (James A. Hyerczyk) — Fri, 20 Aug 2010 12:40:00 GMT

Earlier this week the Australian Dollar failed to breakout to the upside and is now threatening to freefall to a major 50% price level at .8644. Investors are worried about tomorrow’s election. The polls are showing a dead heat which is complicating matters for investors. Key issues include mining company taxes, tightening the budget, and slashing the deficit. The chart indicates the Aussie could plunge to a major 50% price level at .8644.

The New Zealand Dollar has formed a new lower top at .7191. Lower demand for risky assets, the threat of a slow down in the global economy and worries about the Australian election are pressuring the Kiwi this morning. The charts indicate more room to the downside with .6977 to .6879 the next downside target.

The Euro broke sharply lower after European Central Bank member Axel Weber said the ECB should help banks through end-of-year liquidity tensions before determining in the first quarter when to withdraw emergency leading measures.

Traders sold off the Euro because this comment is being perceived as a sign of weakness. Many investors were pricing in the possibility that the ECB would begin its exit strategy before the end of the year. Shifting this outlook to the first quarter is encouraging investors to slash long positions today.

The downtrend resumed overnight in the Euro when it crossed the last swing bottom at 1.2732. A new main top was formed at 1.2921. Based on the main range of 1.1876 to 1.3334, look for a minimum break to 1.2605.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Secondary Tops Formed in Aussie and Kiwi; More Downside Pressure Likely

jhyerczyk@yahoo.com (James A. Hyerczyk) — Thu, 19 Aug 2010 22:18:00 GMT

The resumption of the downtrend in the equities markets triggered a sharp break in the commodity-linked currencies with the New Zealand Dollar leading the way lower. Today’s surprisingly bad U.S. weekly initial claims report renewed fears of a shutdown of the global economy. If investors continue to shy away from risk, then look for further weakness in the Canadian Dollar and Australian Dollar also.

One question traders are asking each other is whether the Dollar is trending or if it is rangebound. On one hand some traders believe in a bullish scenario for the Dollar because of flight to safety buying. Bearish traders believe the U.S. economy will grow at a slower rate than the rest of the world. This clash between the fundamentals could produce side ways action highlighted by periodic exaggerated swings.

Technically, the Aussie rally failed this week at the 50% price level of the .9221 to .8857 range at .9039. This move has set up a developing bearish secondary lower top. Based on the current chart pattern, look for further weakness with .8644 the next downside target.

Earlier this week the New Zealand Dollar completed a 50% retracement of its recent downswing. The range from .7355 to .6996 ended slightly above the .7175 level at .7191. The charts are suggesting a move to .6977 to .6879 is likely over the nearterm.

On Thursday, the U.S. Dollar rose sharply as risk aversion is back on following a surprisingly weak U.S. jobless claims report. Especially hit hard during the Greenback’s rally were the commodity-linked currencies.

The Euro traded lower after a weak attempt to rally failed after the bearish U.S. report and on the heels of a better than expected forecast for German economic growth.

Technically the Euro is still rangebound amid confusion by traders. Buying and selling interest appears to be even as the bulls want to buy Euros on speculation of renewed strength in the Euro Zone economy but the bears feel the need to sell because of a dim outlook for the global economy.

The charts indicate impending volatility but the direction of the next move is not clear. A breakout to the upside is likely to be met with selling pressure at 1.3033 to 1.3104. A breakdown through support could trigger a downside acceleration to 1.2605 to 1.2433.

The British Pound received a boost Thursday morning following a better than expected U.K. retail sales report. This rally died, however, short of a breakout above the recent high at 1.5701 and after sentiment shifted away from risky assets.

Technically, the Sterling is trapped between a pair of 50% levels at 1.5560 and 1.5635. Major support is being provided by an uptrending Gann angle from the 1.4229 bottom at 1.5529 today. A close under this angle could trigger a tremendous downslide.

The USD JPY started the day in a potentially bullish position as it tried to build support inside of a retracement zone at 85.36 to 85.55. At one time today, it looked as if the Dollar/Yen was readying to breakout above the last swing top at 86.37. This move would’ve changed the daily trend to up.

This pair sold off sharply after the U.S. released a surprisingly bad weekly initial claims report. U.S. equities sold off on the news, triggering a flight to safety rally in the Japanese Yen. Unless this market can regain the retracement zone, look for 84.73 to fail. This would put the Dollar/Yen a new multi-year low.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

U.S. Dollar Rises Sharply after Disappointing Initial Claims Data

jhyerczyk@yahoo.com (James A. Hyerczyk) — Thu, 19 Aug 2010 17:07:00 GMT

The U.S. Dollar is rising sharply at the mid-session as risk aversion is back on following a surprisingly weak U.S. jobless claims report.

The Euro is now trading lower after a weak attempt to rally after the bearish U.S. report and on the heels of a better than expected forecast for German economic growth.

Technically the Euro is still rangebound amid confusion by traders. Buying and selling interest appears to be even as the bulls want to buy Euros on speculation of renewed strength in the Euro Zone economy but the bears feel the need to sell because of a dim outlook for the global economy.

The charts indicate impending volatility but the direction of the next move is not clear. A breakout to the upside is likely to be met with selling pressure at 1.3033 to 1.3104. A breakdown through support could trigger a downside acceleration to 1.2605 to 1.2433.

The British Pound received a boost this morning following a better than expected U.K. retail sales report. This rally died, however, short of a breakout above the recent high at 1.5701 and after sentiment shifted away from risky assets.

Technically, the Sterling is trapped between a pair of 50% levels at 1.5560 and 1.5635. Major support is being provided by an uptrending Gann angle from the 1.4229 bottom at 1.5529 today. A close under this angle could trigger a tremendous downslide.

The USD JPY started the day in a potentially bullish position as it tried to build support inside of a retracement zone at 85.36 to 85.55. At one time today, it looked as if the Dollar/Yen was readying to breakout above the last swing top at 86.37. This move would’ve changed the daily trend to up.

This pair sold off sharply after the U.S. released a surprisingly bad weekly initial claims report. U.S. equities sold off on the news, triggering a flight to safety rally in the Japanese Yen. Unless this market can regain the retracement zone, look for 84.73 to fail.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Euro Consolidating; Traders Waiting for Value

jhyerczyk@yahoo.com (James A. Hyerczyk) — Thu, 19 Aug 2010 10:05:00 GMT

The EUR USD is trading lower overnight. Based on the daily chart, this market has been having trouble regaining the bullish side of an uptrending Gann angle from the 1.1876 bottom. This angle comes in at 1.2936 today. The market will remain in a weak state unless this angle can be regained. Downtrending Gann angle resistance is at 1.2974.

The main trend on the daily chart is down. This trend turned lower when the market crossed the swing bottom at 1.3119 several days ago. A new main bottom has been formed at 1.2732, creating a new range at 1.3334 to 1.2732. We are trading inside of this short-term range right now.

The way I see it, we are in the middle of nowhere at this time. Based on the major range of 1.1876 to 1.3334, the best value area for a possible buy is 1.2605 to 1.2433. From a seller’s perspective, the best area to initiate new shorts is in the retracement range of the 1.3334 to 1.2732 range at 1.3033 to 1.3104.

This being said the best way to play the Euro is to look for the acceleration points or logical prices for stop placement. On the upside, watch for a possible breakout above the Gann angle at 1.2936. A move above this price could trigger an acceleration to the retracement zone at 1.3033 to 1.3104.

Based on the current pattern, the market has yet to form a secondary lower top. The first sell-off turned the main trend down but this move was most likely longs bailing out. This means that fresh shorts may be waiting to enter the market if the price is right.

The buyers are looking for value and the opportunity to go long at a favorable price. From June to August the Euro rallied from 1.1876 to 1.3334. The ideal spot for fresh buyers to be waiting is at the retracement zone at 1.2605 to 1.2433.

Until the market makes its move toward either of these retracement zones, look for choppy sideways action. If you feel the need to trade, the look for acceleration area and go the way of the move until the momentum slows down. This is likely to occur when either a big buyer or big seller shows up inside the retracement zones.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Dollar/Yen Consolidating; Could be Ripe for Rally

jhyerczyk@yahoo.com (James A. Hyerczyk) — Thu, 19 Aug 2010 00:45:00 GMT

The USD JPY is consolidating inside the retracement zone created by the 84.73 to 86.37 range. This zone is 85.55 to 85.35. If the market can form a support base then look for it to make a run at the swing top at 86.37. Not only will a breakout over this level turn the main trend to up on the daily chart, but it will also confirm last week’s weekly closing price reversal bottom.

The Dollar/Yen is also sitting on a major downtrending Gann angle from the 94.98 top at 85.48. This angle is acting like a pivot price. Look for the market to strengthen above it and weaken below.

Based on the current chart formation, it looks as if the key will be breaking out over and sustaining a move above 85.55. This scenario would put the market on the bullish side of both the 50% level and the downtrending Gann angle.

The short-term charts indicate that the market may have trouble at 86.42 to 86.82 and 86.94 to 87.46. Once these areas are cleared, then watch for a possible acceleration to the upside with 89.85 a potential upside target.

The possibility of an intervention may still be lingering in the air. This speculation fueled last week’s rally, but weak U.S. economic data has prevented the market from following through this week.

The Japanese government and the Bank of Japan may still be considering an intervention, but at first wanted to weaken the Yen through a verbal intervention. At this time it is possible, that government officials and the BoJ are trying to drum up support for an intervention.

Another reason for a rally would be the possibility of a stock market rally. The market is looking good this week and a breakout to the upside could renew interest in the carry trade, a strategy that involves selling the Yen.

Traders should focus on one area of the chart at this time, 85.36 to 85.55. A close below the lower level would indicate weakness, but a close above the upper level could indicate the start of a strong rally.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Dollar Mixed; Traders Turn to Stocks for Direction

jhyerczyk@yahoo.com (James A. Hyerczyk) — Wed, 18 Aug 2010 17:05:00 GMT

The Dollar is trading mixed at the mid-session. The lack of any fresh economic news is encouraging investors to seek direction from the equity markets. It seems the only market moving with any conviction is the British Pound.

The British Pound erased early session losses and opened better in New York following the release of the Bank of England minutes which showed that the Monetary Policy Committee voted 8 -1 to keep interest rates at historically low levels.

Besides voting to keep rates low, the BoE also voted to maintain its asset-purchase program at 200 billion pounds. The MPC discussed both easing and tightening at its latest meeting before voting overwhelmingly to maintain the status quo.

The recent discussion has been about the U.K. inflation. Some believe that it is too high and not likely to fall back under the BoE’s target rate of 2.0%. Based on the conviction of the BoE members at its last meeting, however, it looks as if investors believe what the central bank is saying about the inflation rate easing back toward the target by 2012.

Technically the British Pound found support early this morning on an uptrending Gann angle from the 1.4229 bottom after piercing a key 50% level at 1.5560. Regaining this level has put the market in a strong position to post a daily closing price reversal today. This pattern suggests the possible start of a 2 to 3 day rally back to 1.5746.

The Australian Dollar is under pressure at the mid-session. The Aussie weakened after a report measuring the number of jobs available for skilled workers fell 0.3 percent in August. The decline in this wage index is a signal that the economy may be cooling, leading to the selling pressure.

Technically, the Aussie may be completing a 50% retracement of the recent short-term decline. A failure between .9039 and .9083 could mean a secondary lower top is forming. This pattern could mean the start of increased selling pressure.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

British Pound Erases Losses against Dollar after Minutes are Released

jhyerczyk@yahoo.com (James A. Hyerczyk) — Wed, 18 Aug 2010 10:48:00 GMT

The British Pound erased early session losses and is now expected to open better in New York following the release of the Bank of England minutes which showed that the Monetary Policy Committee voted 8 -1 to keep interest rates at historically low levels.

Besides voting to keep rates low, the BoE also voted to maintain its asset-purchase program at 200 billion pounds. The MPC discussed both easing and tightening at its latest meeting before voting overwhelmingly to maintain the status quo.

Inflation is the key matter being discussed in the U.K. at this time, but MPC members found the time to talk about concerns over tight credit conditions, the impact of the government’s proposed budget measures on economic activity, and weaker business surveys that pointed to slowing output growth.

Regarding inflation, the BoE said “the weight of evidence continued to suggest that the margin of spare capacity was likely to bear down on inflation and bring it back to target in the medium term once the impact of temporary factors had worn off.”

The lone dissenter, Andrew Sentance, argued that rates should go up 25 basis points because inflation risks were not temporary and actually was skewed to the upside.

It’s obvious where to the two differ. The central bank sees high inflation as a temporary condition and Mr. Sentence believes it will remain a risk to the economy.

Sentence’s argument that inflation is not a temporary condition is based on the fact that inflation has been above the BoE’s 2% annual target in 41 out of the past 50 months and the government’s planned increase in value added taxes would mean that inflation would stay above target longer than the central bank had previously projected. With the vote to keep rates steady, 8 to 1, it is clear that the other member’s don’t buy his argument and truly believe that inflation will ease back below the 2% target by 2012 without any additional help from the central bank.

If there is truly enough spare capacity to drive inflation lower, then the BoE is likely to be right, but a sudden shift in demand could use up this excess, thereby driving up inflation or at least holding it steady, but above target. In my opinion, the BoE is predicting a slow down in consumer demand, and this cannot be good for the economy.

The inflation data released on Tuesday showed annual consumer inflation slowed to 3.1% in July from 3.2% in June. Although central bank officials acted surprised by the figure, BoE Governor Mervyn King issued a letter reiterating that spare capacity would eventually weigh on prices.

Technically the GBP USD has been trying to build a support base at the 50% price level of the 1.5123 to 1.5997 range at 1.5560. Last night this level was pierced but the market found buyers waiting at a long-term uptrending Gann angle at 1.5509 today. Tests of this angle have produced bottoms four times since the main bottom was formed at 1.4229 on May 20. Because of the strength demonstrated by this angle currently and in the past, one has to conclude that a break through this level will trigger a massive acceleration to the downside.

Shortly before the New York opening, the British Pound is trading higher and in a position to post a daily closing price reversal bottom. This formation suggests the possibility of a two to three day rally back at least 50% of the last swing down. This makes 1.5729 an upside target over the short-run.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Risk Trade Back On; USD JPY Set Up for Rally

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 17 Aug 2010 21:55:00 GMT

The USD JPY got a boost today because of the strong rally in the U.S. equity markets. A combination of friendly events fueled today’s rally which began overnight after European and Asian traders set out to satisfy their appetites for risk by supporting equities.

News that Potash Corp. rejected a buyout from BHP Billiton Ltd helped drive agricultural companies higher on the thought that other companies may be in BHP’s radar now that the original deal fell through. A report showing that retail giant Wal-Mart Stores, Inc. beat earnings estimates also helped drive investors into equities. The news regarding Wal-Mart was a sign of strong consumer spending in the wake of a dismal outlook for the economy.

At least for the time being, investor appetite for risk seems to be stronger than the desire for safety. Today’s rally was tipped off on Monday when all three major futures indices posted daily closing price reversal bottoms.

The charts suggest the USD JPY is trying to form a secondary higher bottom. The ability to regain the retracement zone at 85.55 to 85.36 is a strong sign that the Dollar/Yen may make another attempt later in the week to confirm last week’s weekly closing price reversal bottom.

Although the possibility of an intervention by the Bank of Japan and the Japanese government seems to be remote, a strong rally in the equity markets could trigger renewed interest in the carry trade especially if coupled with better than expected U.S. economic data.

The chart pattern says the Dollar/Yen is set up for a rally. It is now up to investors to show up to support the move. Without buying volume, this pattern could fade away like several have over the past few months.

The GBP USD is trying to establish support on a minor 50% price level at 1.5635. Breaking this level could trigger an acceleration to 1.5470. Needless to say, the Sterling is at a critical point on the short-term chart. In addition, there is an uptrending Gann angle at 1.5546. This angle has helped support the rally since May. Watch for a technical bounce up if this angle is tested.

Fundamentally, the British Pound took a jolt early this morning when it was reported that July inflation was lower than expected. This weakness pressured the Sterling all day. A drop in U.K. inflation is a sign that the economy is slowing. This is a concern because it could indicate the possibility of a double-dip recession, plus it comes at a time when the government is reading to apply new austerity measures and higher taxes.

The drop in the inflation rate from 3.2% to 3.1% was the third consecutive month that prices have risen more slowly. The surprise nature of this slow down highlights the difficulty the Bank of England is having in predicting how fast and far it will fall.

The BoE would like to see inflation drop to at least 2%. At this time, prices for energy, clothing and furniture are easing, but the cost of food saw its biggest monthly rise in two years. The difference in these two inflation rates partially demonstrates the power of consumer spending. It seems the consumer has a little more control on his spending for energy and other discretionary consumer goods but is not willing to cutback on his spending for necessities such as food.

Another concern for the BoE at this time is that wages are not keeping pace with overall inflation. This is another factor that could lead to a slow down in consumer spending. With housing prices already falling, the BoE does not want to deal with a serious drop off in consumer spending.

The primary reason for the sell-off in the British Pound today was most likely this growing concern because it means the BoE will have to begin another round of currency-weakening stimulus.

Tuesday’s action suggests that the risk trade is back on but that traders are willing to cherry-pick which currencies are strong and which are weak depending on the economic outlook. This scenario may produce volatility in the marketplace especially for traders who get caught up in the broad fundamentals and fail to pay attention to the details. This is one reason why following only the trade-weighted Dollar Index can get you in trouble.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

British Pound Bucking Trend, Selling Off Against the U.S. Dollar

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 17 Aug 2010 16:15:00 GMT

The U.S. Dollar is trading sharply lower at the mid-session against most majors with the exception of the British Pound and the Japanese.

Desire for risk is helping to boost the Dollar/Yen after a rise in stocks led to a renewal of the carry trade, but news that U.K. annual July consumer-price inflation slowed in June is pressuring the British Pound.

The charts suggest the USD JPY could regain a retracement zone at 85.55 to 85.36. This is will be a potentially bullish signal because it will mean the market is trying to form a secondary higher bottom.

The GBP USD is trying to establish support on a minor 50% price level at 1.5635. Breaking this level could trigger an acceleration to 1.5470. Needless to say, the Sterling is at a critical point on the short-term chart. In addition, there is an uptrending Gann angle at 1.5546. This angle has helped support the rally since May. Watch for a technical bounce up if this angle is tested.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Investors Shying Away from U.S. Dollar in Wake of Economic Concerns

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 17 Aug 2010 11:31:00 GMT

The U.S. Dollar is under pressure overnight as traders throw their support into the Yen, Euro, Swiss Franc and the commodity-linked currencies. On-going concerns over a slowdown in global growth continue to be the main catalyst behind the selling pressure.

With the Dollar giving back some of its gains from last week, investors are beginning to question if the current weakness is the start of another leg down or simply a retracement of last week’s rally. Traders seem to be a little confused as to which route to take today. On one hand, the rallies in the Japanese Yen and Swiss Franc suggest investors are seeking shelter in lower yielding currencies. On the other hand, the rallies in the Australian Dollar, New Zealand Dollar and Canadian Dollar indicate there is still appetite for risk.

Volatility is likely to increase over the near term as traders will eventually have to decide whether risk is on or risk is off.

The USD JPY is trading flat to lower shortly before the New York session opening. The inability to follow-through to the upside after last week’s weekly closing price reversal bottom has all but taken the chance of an intervention off the table.

Technically, the USD JPY still has a chance to begin another attempt to breakout to the upside however. The overnight weakness has created a new swing top at 86.37 which means a breakout over this level will turn the main trend to up on the daily chart.

Based on the short-term range of 84.73 to 86.37, the market has to begin establishing support at the 50%/62% retracement zone at 85.55 to 85.36 or selling pressure will overcome the buying and this pair will test or exceed the previous swing bottom at 84.73.

Although the overnight price action penetrated the low end of this zone, a close over either 85.36 or even better 85.55 will be a strong indication that new buyers may have stepped up. This would put the market in a position to post a possible secondary higher bottom.

On Monday the Euro posted a daily closing price reversal bottom at 1.2732. Last night this reversal bottom was confirmed, setting up the possibility of a short-covering rally to 1.3033 to 1.3104.

Often after a hard sell-off from a major top, the market has a snapback rally to set up a secondary lower top. This occurs because the first break is usually dominated by longs bailing out. So another rally is needed to give traders an opportunity to put on fresh shorts. A rally back to 1.3033 to 1.3104 will give investors an opportunity to do so.

If this rally fails to materialize, then look for the downtrend to resume with an objective of the major retracement zone at 1.2605 to 1.2433.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Japanese Yen Traders Choose Safety over Intervention

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 16 Aug 2010 23:14:00 GMT

Risk aversion helped strengthen the Japanese Yen despite the news that Japan’s gross domestic product slowed during the second quarter.

The weakness in the USD JPY also meant that last week’s weekly closing price reversal bottom was not confirmed. This means that traders are once again favoring safety over the possibility of an intervention by the Japanese government and the Bank of Japan.

Traders now believe that an intervention will not be effective without the cooperation of other central banks which seems remote at this time since many are dealing with too many problems of their own without having to worry about Japan.

Traders shrugged off stories of heightened sensitivity in Euro Zone bond markets and drove down the Dollar.

Early in the session the Euro was down on reports that the premium investors pay to hold 10-year Irish and Greek government bonds rather than German Bunds were rising. In addition the cost of insuring their debt against default also increased. The Euro was under pressure early in the session on this news, but by mid-session had turned around to the positive side. The market was able to hold these gains into the close.

Contributing to the turnaround in the Euro were three lackluster U.S. economic reports. This morning’s NY Fed Empire State Manufacturing Index didn’t help the outlook for the economy. The report actually gave off mixed signals since it showed that manufacturing is still expanding, but at a slower pace.

The EUR USD also received support from a surprise decline in the NAHB-Housing Market Index. The report showed the index declined to 13 from 14 the month prior. Traders were pricing in an increase to 15.

Technically the Euro posted a daily closing price reversal bottom. Based on the current short-term range of 1.3334 to 1.2732, traders should watch for the start of a 2 to 3 day rally with 50% of this range the next objective at 1.3033. A breakout through 1.2807 is needed to confirm the pattern.

All three commodity-linked currencies showed a little strength on Monday with the Australian and New Zealand Dollar posting closing price reversal bottoms.

The Australian Dollar could be starting a retracement rally to .9039. The New Zealand Dollar retracement target is .7175. Short-term oversold conditions and the return of demand for risk are the primary drivers behind this morning’s developing reversal bottom. Like the Euro, these two currency pairs are not outright buys until confirmed. Otherwise the markets may just drift lower. The Australian Dollar’s reversal will be confirmed after a rally through .8993, the Kiwi, after a breakout through .7102.

Continue to look for the possibility of extreme volatility. The threat of a Japanese intervention will still linger until government officials put it to death. In addition, concerns about sovereign debt of peripheral Euro Zone members have begun rising again. At a minimum this should limit gains in the Euro, but could lead to fresh selling pressure.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Sentiment Shift toward Risk Punishing Dollar

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 16 Aug 2010 18:24:00 GMT

Traders are shrugging off stories of heightened sensitivity in Euro Zone bond markets and are driving down the Dollar at the mid-session.

Early in the session the Euro was down on reports that the premium investors pay to hold 10-year Irish and Greek government bonds rather than German Bunds are rising. In addition the cost of insuring their debt against default also increased. The Euro was under pressure early in the session on this news, but has since turned around to the positive side.

Technically the current EUR USD chart formation suggests a possible closing price reversal bottom. Based on the current short-term range of 1.3334 to 1.2732, traders should watch for the start of a 2 to 3 day rally with 50% of this range the next objective. This minimum retracement objective is 1.3033.

All three commodity-linked currencies are also showing signs of potential reversal bottoms. The Australian Dollar could be starting a retracement rally to .9039. The New Zealand Dollar retracement target is .7175. Short-term oversold conditions and the return of demand for risk are the primary drivers behind this morning’s developing reversal bottom.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

U.S. Dollar Mixed; No sign of Japanese Intervention

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 16 Aug 2010 11:22:00 GMT

The U.S. Dollar is trading mixed against most major Forex markets, posting gains against the commodity-linked currencies and losses against the Euro, Yen and Swiss Franc.

Early in the session, the Dollar was trading a little firmer, but was unable to hold gains after Japanese second-quarter gross domestic product data showed the nation’s economy slowed to a crawl. The sluggish GDP report helped China move up to become the world’s second largest economy.

The reported slow down in the Japanese economy also may have strengthened the government’s case for a weaker Yen. For weeks the government has warned that the high price of the Yen may be damaging demand for Japanese exports, thus hurting the economy.

At the close on Friday, the Yen posted a reversal bottom for the week. This was an indication that traders were looking for a possible intervention. The lack of follow-through to the upside means this reversal bottom has not been confirmed.

The main driver in the Dollar/Yen market the past few trading sessions has been the anticipated moves by the Japanese government and the Bank of Japan. So far all the rhetoric has amounted to a “verbal intervention”, but this has been enough to scare the weaker shorts into covering their positions.

This week Prime Minister Naoto Kan and central bank Governor Masaaki Shirakawa meet to discuss the value of the Yen and its effect on the economy. Look for increased volatility in the Japanese Yen as traders try to forecast the government’s and BoJ’s next move.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Dollar/Yen in Position to Post Weekly Reversal Bottom

jhyerczyk@yahoo.com (James A. Hyerczyk) — Fri, 13 Aug 2010 16:00:00 GMT

The USD JPY is trading higher at the mid-session, putting it in a position to close higher for the week. A close above last week’s low at 85.48 will produce a weekly closing price reversal. This formation, once confirmed by a follow-through rally next week, often leads to the start of a 2 to 3 week retracement to a major 50% level, currently identified as 89.55.

Today’s rally in the Dollar/Yen has helped form a new main bottom on the daily chart at 84.73. Based on the short-term range of 88.11 to 84.73, traders should watch for a possible test of a retracement zone at 86.42 to 86.82. Based on today’s upside momentum, this area is likely to be tested by the close.

The current two-day rally in the USD JPY has most likely been a reaction to the “verbal intervention” by the Japanese government earlier this week. Some traders feel the government will intervene at this time, but doubts still linger about its effectiveness.

According to the Bank of Japan minutes from the July 14-15 meeting published overnight, the BoJ is closely monitoring the effect of a strong Yen and falling stock prices on the economy. If one interprets this to mean that the BoJ is seriously considering an intervention at this time, then this news will act as the catalyst to drive the Dollar/Yen sharply higher.

Throughout the entire financial crisis the Dollar and the Yen have both benefitted from investors’ unwillingness to hold on to risky assets. Most of the rally in the Yen has been traders seeking shelter in safe-haven assets. The possibility of a rally in the Dollar/Yen exists at this time because speculators feel the Japanese government will intervene in order to protect the interest of its exporters. One key to this rally taking place will be whether a stock market break will trigger a flight-to-safety rally, thereby limiting gains in the Yen following an intervention. In other words, if equities break hard, will the news of an intervention be enough to counter-act the demand for the lower risk Japanese Yen. If not, then the Yen seems destined to move higher.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Euro Rallies on Upbeat German Economic News; Will Japan Intervene?

jhyerczyk@yahoo.com (James A. Hyerczyk) — Fri, 13 Aug 2010 12:30:00 GMT

The Euro is up this morning following a four-day setback which saw the currency drop from its highest level since late April. After reaching a low at 1.2780 on Thursday, the Euro has recovered slightly from this level and is now resting on an uptrending Gann angle at 1.2856.

This angle is a key balancing point and must hold in order to trigger the start of a short-covering rally back to 1.3057. A failure to hold this potential support angle could trigger further weakness which will eventually lead to a decline to a major 50% level at 1.2605.

Overnight the Euro received some support following the release of a report which showed the German economy grew at the fastest pace in two decades. This news helped underpin the market, leading to speculation that Europe is on a path to recovery.

Germany’s gross domestic product rose 2.2 percent in the second quarter from the first quarter. This growth rate was higher than analyst estimates of 1.3 percent and represented the fastest pace since 1991. The news helped trigger some light buying and short-covering, but gains may have been limited because this news is backward looking. At this time, traders are concerned about future economic growth.

The USD JPY is giving up some of its gains from the last two days, but is still in a position to post a weekly closing price reversal bottom. Last week the Dollar/Yen closed at 84.48, but after reaching a 15-year low this week, rallied, putting it in a position today to finish higher for the week. A closing price reversal bottom once confirmed by follow-through buying often leads to the start of a 2 to 3 week rally which culminates at a major 50% price level. In this case, the potential upside target is 89.55. A failure to close higher this week sets up the Dollar/Yen for further downside action next week.

The current two-day rally in the USD JPY has most likely been a reaction to the “verbal intervention” by the Japanese government earlier this week. Some traders feel the government will intervene at this time, but doubts still linger about its effectiveness.

According to the Bank of Japan minutes from the July 14-15 meeting published overnight, the BoJ is closely monitoring the effect of a strong Yen and falling stock prices on the economy. If one interprets this to mean that the BoJ is seriously considering an intervention at this time, then this news will act as the catalyst to drive the Dollar/Yen sharply higher.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Dollar/Yen in Position to Post Weekly Closing Price Reversal Bottom

jhyerczyk@yahoo.com (James A. Hyerczyk) — Thu, 12 Aug 2010 21:30:00 GMT

The U.S. Dollar continued to mount its strong recovery against the major currencies on Thursday. The Dollar Index rose sharply, led primarily by a strong gain in the Dollar/Yen and reasonable advances against the commodity-linked currencies.

The weekly Dollar Index chart is in a position to post its strongest weekly gain since early May. The current rally was set up when the index held the .618 retracement level of the entire November to June rally from 75.03 to 89.22. Based on the short-term range of 89.22 to 80.17, look for this current rally to advance to perhaps 84.69 over the near-term.

The U.S. Dollar finished higher versus the Japanese Yen after Japanese Prime Minister Kan voiced his strong opinion about the recent movement in the Forex markets.

In what amounts to be a form of “verbal intervention”, Kan called the recent swings in the currency “rough”, and said they “are a little too rapid”. These are the strongest comments from the Japanese government which usually only says it is concerned about the movement in the currency and excessive volatility. Some traders believe the strong language used by Kan is a scare tactic which only represents an attempt to limit gains in the Yen and in no way should be interpreted as a precursor to an actual intervention.

Some traders rushed out to sell the Yen based on the comments, but the majority of market participants are said to believe that an intervention is unlikely for mostly logistic reasons. The likelihood of an intervention is small because they seldom work and the size needed to actually have an influence on the market would require the cooperation of the U.S. and other key central bank players.

Some Forex traders also believe that the recent rally in the Yen has been orderly and based on sound economic reasons. As long as the currency doesn’t swing violently or is influenced by excessive speculation, the chance of the Japanese government garnering support from other nations for an intervention remains remote.

The concerns voiced by Japanese officials are not without merit however. Their primary concern at this time is to protect the economy. By expressing strong opinions which may weaken the Yen, the government is doing its best to protect Japan’s export driven economy.

Another reason why an intervention may not work at this time is because the desire to buy the Yen is being triggered by safe-haven demand because of fear that the global economic recovery may be stalling. Declines in the Euro Zone and U.S. economies could fuel worries that the world’s economy is headed toward a double-dip recession. The action by the Fed earlier in the week has contributed to this growing pessimism. If a slowdown is confirmed, then investors may begin to buy the Yen more aggressively.

Technically, the USD JPY slid to a 15-year low on Wednesday before buyers stepped in to trigger a short-covering rally into the close. The follow-through rally overnight helped form a minor bottom at 84.73, but failed to garner enough upside momentum to trigger a clean closing price reversal bottom.

The strong rally and subsequent follow-through, however, has put the Dollar/Yen in a position to post a weekly closing price reversal. The key number to watch is last Friday’s close at 85.48. The Dollar/Yen close above this number today, but a close over this level on Friday will be a strong indication that this market is gearing up for a 2 to 3 week retracement.

Trading may get volatile overnight and during Friday’s day session because of the struggle between fundamental and news driven traders who believe a move by the Japanese government to weaken the Yen is inevitable. These traders may get support from technical traders who believe that the Dollar/Yen is oversold, but trend traders may prevail if demand for risky assets continues to decline, triggering an extension of the flight-to-quality break.

The importance of this developing weekly closing price reversal in the Dollar/Yen cannot be overemphasized at this point. This type of pattern has been known to generate 50% retracements over a 2 to 3 week period which means that a rally to 89.85 is possible over the short-run. Once again keep the focus on how this market behaves at 85.48 tomorrow. The action at this level will dictate how serious traders are about turning this pair around and could offer clues as to what the Japanese government’s next move is going to be.

The Greenback closed up against the commodity-linked currencies, extending it winning streak versus the Australian and New Zealand Dollars. Fears of a global economic slowdown fueled by this morning’s unexpected rise in unemployment claims, pressured equities which helped curtail investor demand for risky assets.

Some of the weakness in the Aussie was triggered last night after the Australian unemployment rate unexpectedly rose to 5.3 percent in July, compared to the median forecast of 5.1 percent. Further downside action was fueled by the U.S. Weekly Initial Claims Report which showed an increase of 2,000. This number pegged total claims at 484,000, the highest level since mid-February.

Technically, the Kiwi and Aussie are slightly oversold on the short-term charts, but the daily charts indicate further downside action is likely.

The New Zealand Dollar is nearing an uptrending Gann angle at .7048 which could produce a technical bounce, but ultimately downside momentum is likely to pressure this market into a 50% level at .6977.

The Australian Dollar broke an uptrending Gann angle this morning, triggering stops. Look for an acceleration to the downside if the late July swing bottom at .8904 is violated. Although its primary downside target of .8644 is pretty far-off at this time. This pattern should not be taken lightly since it suggests that a major fundamental development may take place which drives this market sharply lower over the near-term. A combination of an uptrending Gann angle and the 50% level of .8644 suggest that this price may be tested on August 13th. Bad news from China may be the catalyst which triggers a free fall.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

U.S. Dollar Extending Winning Streak versus Aussie and Kiwi

jhyerczyk@yahoo.com (James A. Hyerczyk) — Thu, 12 Aug 2010 16:00:00 GMT

The Greenback is up against the commodity-linked currencies, extending it winning streak versus the Australian and New Zealand Dollars. Fears of a global economic slowdown fueled by this morning’s unexpected rise in unemployment claims, pressured equities which helped curtail investor demand for risky assets.

Some of the weakness in the Aussie was triggered last night after the Australian unemployment rate unexpectedly rose to 5.3 percent in July, compared to the median forecast of 5.1 percent. Further downside action was fueled by the U.S. Weekly Initial Claims Report which showed an increase of 2,000. This number pegged total claims at 484,000, the highest level since mid-February.

Technically, the Kiwi and Aussie are slightly oversold on the short-term charts, but the daily charts indicate further downside action is likely.

The New Zealand Dollar is nearing an uptrending Gann angle at .7048 which could produce a technical bounce, but ultimately downside momentum is likely to pressure this market into a 50% level at .6977.

The Australian Dollar broke an uptrending Gann angle this morning, triggering stops. Look for an acceleration to the downside if the late July swing bottom at .8904 is violated. Although its primary downside target of .8644 is pretty far-off at this time. This pattern should not be taken likely since it suggests that a major fundamental development may take place which drives this market sharply lower over the near-term. A combination of an uptrending Gann angle and the 50% level of .8644 suggest that this price may be tested on August 13th. Bad news from China may be the catalyst which triggers a free fall.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Japan Ramps Up “Verbal Intervention” Chatter

jhyerczyk@yahoo.com (James A. Hyerczyk) — Thu, 12 Aug 2010 12:30:00 GMT

The U.S. Dollar is trading slightly better against the Japanese Yen after Japanese Prime Minister Kan voiced his strong opinion about the recent movement in the Forex markets.

In what amounts to be a form of “verbal intervention”, Kan called the recent swings in the currency “rough”, and said they “are a little too rapid”. These are the strongest comments from the Japanese government which usually only says it is concerned about the movement in the currency and excessive volatility. Some traders believe the strong language used by Kan is a scare tactic which only represents an attempt to limit gains in the Yen and in no way should be interpreted as a precursor to an actual intervention.

Some traders rushed out to sell the Yen based on the comments, but the majority of market participants are said to believe that an intervention is unlikely for mostly logistic reasons. The likelihood of an intervention is small because they seldom work and the size needed to actually have an influence on the market would require the cooperation of the U.S. and other key central bank players.

Some Forex traders also believe that the recent rally in the Yen has been orderly and based on sound economic reasons. As long as the currency doesn’t swing violently or is influenced by excessive speculation, the chance of the Japanese government garnering support from other nations for an intervention remains remote.

The concerns voiced by Japanese officials are not without merit however. Their primary concern at this time is to protect the economy. By expressing strong opinions which may weaken the Yen, the government is doing its best to protect Japan’s export driven economy.

Another reason why an intervention may not work at this time is because the desire to buy the Yen is being triggered by safe-haven demand because of fear that the global economic recovery may be stalling. Declines in the Euro Zone and U.S. economies could fuel worries that the world’s economy is headed toward a double-dip recession. The action by the Fed earlier in the week has contributed to this growing pessimism. If a slowdown is confirmed, then investors may begin to buy the Yen more aggressively.

Technically, the USD JPY slid to a 15-year low on Wednesday before buyers stepped in to trigger a short-covering rally into the close. The follow-through rally overnight helped form a minor bottom at 84.73, but failed to garner enough upside momentum to trigger a clean closing price reversal bottom.

The strong rally and subsequent follow-through, however, has put the Dollar/Yen in a position to post a weekly closing price reversal. The key number to watch is last Friday’s close at 85.48. This price level may act as a pivot today with choppy two-sided trading on both sides of it, but a close over this level on Friday will be a strong indication that this market is gearing up for a 2 to 3 week retracement.

Trading may get volatile over the next two days because of the struggle between fundamental and news driven traders who believe a move by the Japanese government to weaken the Yen is inevitable. These traders may get support from technical traders who believe that the Dollar/Yen is oversold, but trend traders may prevail if demand for risky assets continues to decline, triggering an extension of the flight-to-quality break.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Commodity-linked Currencies Fall Sharply Led by Australian Dollar

jhyerczyk@yahoo.com (James A. Hyerczyk) — Wed, 11 Aug 2010 20:30:00 GMT

All of the commodity-linked currencies were down hard on Wednesday. The Australian Dollar was down the most because of its strong link to China. Downside momentum is building in this market which could trigger a test of the last main bottom at .8904. Ultimately, this market seems destined to test a major 50% price level at .8644.

The flight to safety rally sent investors into the Japanese Yen. Buyers stepped in however after the Yen reached a 15 year low. Talk is circulating that the Japanese government may attempt to intervene. Its biggest concern at this time is that a rise in the Yen will hurt exports. This expectation coupled with talk of lower demand from China and the U.S. will hurt the economic recovery.

The British Pound was down over 1% on Wednesday as worries about a slowdown in the economy forced investors to wonder if the U.K. economic recovery was slowing down.

Overnight the Bank of England lowered its forecast for growth expectations in its quarterly inflation report. The BoE cited declining confidence, tight credit conditions and the government’s planned austerity measures as the main reasons for the reduction in its outlook. In May, the central bank forecast about 3.6% growth. The revised number is 3%.

Although the U.K. Gross Domestic Product was more than expected during the second quarter, a key central bank official indicated that the total growth for the year would most likely average out.

In a statement, BoE Governor Mervyn King said, “business and consumer sentiment have shown signs of softening, measure of financial fragility remain elevated, and there is great uncertainty about the outlook for both the United States and our most important trading partner, the euro area.”

This statement cast on pall on the British Pound and the Euro, triggering hard sell-offs in both of these markets.

The Sterling changed its daily trend to down on Tuesday when it took out its last swing bottom at 1.5819. Today this market tested a key 50% level at 1.5635. Although an intraday technical bounce took place, triggering a small short-covering rally, this level is not likely to hold. The major downside objective is an uptrending Gann angle from the 1.4229 bottom at 1.5429.

The slide in the Euro continued on Wednesday with this pair losing over 2%. A slowdown in the global economy is expected to hit the Euro Zone particularly hard especially since it is barely recovering from the sovereign debt crisis from sixty days ago.

Technically, the main trend on the daily chart turned down earlier in the week. Downside momentum is strong and selling pressure hard, but short-term indicators are indicating this market is getting close to oversold. The bigger charts indicate this market is likely to continue down until it reaches a major retracement level at 1.2605. Short-term, however, there may be a technical bounce at an uptrending Gann angle at 1.2836. This angle is being tested overnight. If profit-takers come into the market, then watch for a snapback rally to 1.3085 before the selling resumes.

Continue to look for the mass exodus out of higher risk currencies to continue, however investors should watch for quick short-covering rallies in most of the major currencies because of short-term oversold conditions. This first break in the British Pound and Euro may be only long liquidation. The chart patterns suggest there may be one more rally to test their recent highs. This move will give fresh shorts an opportunity to re-enter the market.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Bank of England Lowers U.K. Growth Outlook

jhyerczyk@yahoo.com (James A. Hyerczyk) — Wed, 11 Aug 2010 16:00:00 GMT

The British Pound is down over 1% at the mid-session as worries about a slowdown in the economy are forcing investors to wonder if the U.K. economic recovery is slowing down.

Overnight the Bank of England lowered its forecast for growth expectations in its quarterly inflation report. The BoE cited declining confidence, tight credit conditions and the government’s planned austerity measures as the main reasons for the reduction in its outlook. In May, the central bank forecast about 3.6% growth. The revised number is 3%.

Although the U.K. Gross Domestic Product was more than expected during the second quarter, a key central bank official indicated that the total growth for the year would most likely average out.

In a statement, BoE Governor Mervyn King said, “business and consumer sentiment have shown signs of softening, measure of financial fragility remain elevated, and there is great uncertainty about the outlook for both the United States and our most important trading partner, the euro area.”

This statement cast on pall on the British Pound and the Euro, triggering hard sell-offs in both of these markets.

The Sterling changed its daily trend to down on Tuesday when it took out its last swing bottom at 1.5819. This morning it is testing a key 50% level at 1.5635. Although an intraday technical bounce is triggering a small short-covering rally, this level is not likely to hold. The major downside objective is an uptrending Gann angle from the 1.4229 bottom at 1.5429.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Flight-to-Safety Driving Dollar, Yen Higher; U.K. Lowers Growth

jhyerczyk@yahoo.com (James A. Hyerczyk) — Wed, 11 Aug 2010 11:30:00 GMT

The U.S. Dollar is trading sharply higher against most major currencies with the exception of the Japanese Yen. Investor sentiment has shifted away from risk leading to weakness in the commodity-linked currencies. A reduction in the outlook for U.K. GDP is leading to a huge sell-off in the British Pound.

Technically, the Euro main trend is down on the daily chart. Downside momentum is building which is expected to drive this market into an uptrending Gann angle at 1.2816. Ultimately this market is likely to retrace 50% of its recent range to 1.2605.

The main trend is also down in the British Pound. There is minor support at 1.5635. Watch for a technical bounce following a test of this level. The next major downside target is an uptrending Gann angle at 1.5429.

The flight to safety is boosting the Japanese Yen. This market is expected to continue to soar as traders take money from higher risk assets and payback borrowed Yen. Unless the Japanese government actually intervenes, look for more upside. There may be a technical reversal if there is a verbal intervention but this type of action doesn’t work for a very long time.

The Fed set the tone for today’s selling of higher risk assets. Despite efforts to ease into a period of loosening, the Fed may have actually increased the pessimism in the market. The U.S. is a leading economy so the thinking is that if the U.S. economy is cooling off, then it’s just a matter of time before this weakness spreads globally.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Greenback Pares Gains as Fed Takes Small Step to Ease Monetary Policy

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 10 Aug 2010 21:30:00 GMT

The U.S. Dollar gave back much of its earlier gains Tuesday afternoon after the central bank’s Federal Open Market Committee revealed a disappointing outlook for the U.S. economy.

The Federal Open Market Committee left interest rates unchanged as expected as well as a majority of its policy statement from previous sessions although it kept the language stating that inflation is “subdued” without specifically mentioning any issues with deflation. It also added that interest rates would remain low for “an extended period”.

The Dollar declined from its pre-report high as the Fed kept its balance sheet intact while changing the composition of said balance sheet by moving out of mortgages and into long-term Treasuries.

The FOMC vote was not unanimous, as Kansas City Federal Bank President Thomas Hoenig once again remained the lone hawk. The vote was not “bookended” by any doves as some had anticipated.

Before the release of the report that was much speculation as to how the Fed would address the issue of deflation. Concerns were being raised because if allowed to spiral out of control, deflation would be very difficult to contain, unlike inflation which the Fed usually battles with many of its monetary policy weapons.

The move by the Fed was enough to keep the pressure on interest rates while implying that the outlook for the economy remains rocky. Some analysts felt the move by the Fed was merely symbolic, but did send a strong signal that it was not going to stand on the sidelines doing nothing. Moving principal payments from the mortgage market to long-term Treasuries leaves the door open for the central bank to make more aggressive balance sheet moves at its next meeting on November 3 should the economy fail to improve.

While not actually disappointing investors with its actions, the Dollar did decline after an early morning surge triggered by speculation the Fed would act move aggressively to loosen monetary policy because of a slowing economy. Instead, the Fed may have acted more prudently with its action rather than create an aura of pessimism with unnecessary aggressive action.

Traders shouldn’t get too comfortable with the short-side of the Dollar despite the initial reaction because trading conditions suggest the Greenback is ripe for a rally due to increasing interest in safe haven assets. The next few days will give more clues as to whether the Dollar will rally or resume its recent decline. The first sign of weakness will be new highs in markets that have corrected the past two days, namely the Euro and the British Pound. The Euro and the Sterling both bounced back following earlier weakness, but not enough to reverse the developing downtrend.

Overnight a softer U.K. housing report overshadowed this afternoon’s U.S. Federal Open Market Committee announcement as falling house prices increased jitters in an already fragile economy.

Early in the trading session, a report from the Royal Institution of Chartered Surveyors said July house prices turned negative for the first time since July 2009. This report echoes earlier reports that showed a rising supply of houses for sale and decreased buyer interest. The return of a buyers market indicates the strong possibility of a softer housing market through at least the end of the year, leading to speculation of a double-dip recession.

Technically, after failing to follow-through to the upside following the penetration of a major Fibonacci retracement level at 1.5967 in two out of the last three trading session, the British Pound took out a main swing bottom at 1.5819. This move turned the main trend down on the daily chart. The chart pattern suggests that 1.5633 is the next likely downside target, followed by an uptrending Gann angle at 1.5400.

Concern about a slow down in the global recovery also pressured the Euro. Before the New York session opening, the Euro was trading on its low, threatening to turn the main trend to down on the daily chart on a move through the last swing bottom at 1.3119, a move which took place shortly after the NY opening.

Based on the range of 1.1876 to 1.3334, the chart indicates that this current break could turn into something substantial if investors decide to begin shedding risky assets. If this current break turns into a hard correction, the daily chart indicates that 1.2605 would be the minimum downside target. This price represents a 50% correction of the June to August rally.

Besides the start of downtrends in the Euro and British Pound, the shedding of risky assets such as gold and crude oil could be another sign that the Dollar is getting set to rally. Falling commodity and equity markets are likely to pressure the commodity-linked currencies.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Fed Stays the Course with One Exception

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 10 Aug 2010 19:30:00 GMT

The Federal Open Market Committee left interest rates unchanged as expected as well as a majority of its policy statement from previous sessions.

The Dollar fell and stocks rose as the Fed kept its balance sheet intact while changing the composition of said balance sheet by moving out of mortgages and into long-term Treasuries.

The Fed also said that inflation is “subdued” without specifically mentioning any issues with deflation. It also added that interest rates would remain low for “an extended” period.

The FOMC vote was not unanimous, as Kansas City Federal Bank President Thomas Hoenig once again remained the lone hawk. The vote was not “bookended” by any doves as some had anticipated.

The news weakened the Dollar by fueling short-covering rallies in most major Forex markets.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

U.S. Dollar Hits Highest Level This Month Ahead of Fed Decision

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 10 Aug 2010 16:00:00 GMT

Profit-taking and position squaring ahead of this afternoon’s Federal Open Market Committee decision is helping to drive the U.S. Dollar to its highest level this month. There is still uncertainty regarding how the Fed will act later today. Some investors are looking for a clear decision to renew quantitative easing. Others believe that the Fed will only change the language in its statement acknowledging the economy is slowing down.

The Fed is walking a thin line with today’s decision. It has to be careful not to spook the markets by acting too hastily. Furthermore, it must act with clarity and conviction in order to instill confidence in the markets that it is on the right path.

The Euro changed its main trend to down this morning on the daily chart when it crossed the last swing bottom at 1.3119. If pessimism prevails after the Fed decision and investors continue to shed risky assets, then look for the start of a serious correction to a major 50% price level at 1.2605.

The British Pound also changed its daily trend to down when it broke a swing bottom at 1.5819. After finding resistance at a .618 price level at 1.5967, it is possible it may try to establish short-term support at the 50% level at 1.5635. If this area fails, then look for a move to 1.5400. Traders turned negative on the Sterling following a drop in home prices. With this leading indicator turning bearish, traders fear that the start of planned spending cuts and the implementation of new taxes may have a negative effect on the economy.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Housing Price Dip Turns British Pound Trend Down

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 10 Aug 2010 12:30:00 GMT

A softer U.K. housing report is overshadowing this afternoon’s U.S. Federal Open Market Committee announcement as falling house prices increased jitters in an already fragile economy.

Early in the trading session, a report from the Royal Institution of Chartered Surveyors said July house prices turned negative for the first time since July 2009. This report resonates other reports that showed a rising supply of houses for sale and decreased buyer interest. The return of a buyers market indicates the strong possibility of a softer housing market through at least the end of the year, leading to speculation of a double-dip recession.

Technically, after failing to follow-through to the upside following the penetration of a major Fibonacci retracement level at 1.5967 in two out of the last three trading session, the British Pound took out a main swing bottom at 1.5819. This move turned the main trend down on the daily chart. The chart pattern suggests that 1.5633 is the next likely downside target, followed by an uptrending Gann angle at 1.5400.

Concern about a slow down in the global recovery is also pressuring the Euro. Before the New York session opening, the Euro is trading on its low, threatening to turn the main trend to down on the daily chart on a move through the last swing bottom at 1.3119.

Based on the range of 1.1876 to 1.3334, the chart indicates that this current break could turn into something substantial if investors decide to begin shedding risky assets. If this current break turns into a hard correction, the daily chart indicates that 1.2605 would be the minimum downside target. This price represents a 50% correction of the June to August rally.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Dollar/Swiss May Be Forming Support Base

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 09 Aug 2010 21:30:00 GMT

On Monday the Dollar rose close to 1% against the Swiss Franc. The current chart formation suggests the construction of a possible support base. The low end of the support appears to be 1.0400 to 1.0393. The main trend will change up on the daily chart on a trade through the last swing top at 1.0640.

The U.S. Dollar traded higher ahead of tomorrow’s FOMC meeting. In what was probably position squaring ahead of the Fed meeting; the Dollar posted gains against all majors. The biggest gain coming versus the Swiss Franc. The lack of fresh economic news following Friday’s disappointing Non-Farm Payrolls Report was most likely a contributing factor to the Dollar’s strength.

On Tuesday the Federal Open Market Committee is expected to consider renewing its quantitative easing program by reintroducing its purchase of government bonds and mortgages. Some believe, however, that the Fed is only going to consider extending its monetary policy rather than making an actual change. Either way, investors will be keying in on the language used by the Fed in its policy statement.

Look for the Dollar to gain over the short-run if the Fed’s remains firm in its policy statement. Any softening in the Fed’s tone will put pressure on the Greenback.

The U.S. Dollar / Canadian Dollar traded flat as traders are still trying to sort out last Friday’s surprise rise in Canadian unemployment. With the U.S. and Canadian economies linked closely, tomorrow’s Fed meeting is expected to heavily influence the direction of the Loonie. Any attempt at a short-term fix by the Fed is likely to be bullish for the Greenback. If the Fed decides to take a ‘wait and see” attitude then look for the U.S. Dollar to weaken.

The latest talk in Canada which may help hold the currency in a range is that the economy is cooling which could mean the Bank of Canada will refrain from an interest rate hike at its next meeting on September 8.

The Euro broke on profit-taking on Monday. Technically, the Euro traded in an inside range with a lower close. A downtrending angle from the November top at 1.5144 is helping to stop the advance. The uptrend is still intact, but a break through 1.3119 will turn the main trend down.

For the fourth time in a week the British Pound failed to gain upside momentum when it crossed over a Fibonacci retracement level at 1.5967. The main trend is still up, but a break through 1.5819 will turn the main trend down. The failure to breakout over the Fib level could be an indication that the rally is running out of steam, but because of the low volume, the weakness may have been profit-taking. A close over this level is likely to trigger an acceleration to the upside.

Continue to look for the Forex markets to trade in tight and narrow ranges until the Fed’s announcement Tuesday afternoon. It looks as if Bernanke has enough votes to implement a dovish strategy but depending on how the committee assesses the recent economic data, the FOMC may hint at future changes in monetary policy while evaluating fresh data on a month to month basis.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Dollar Stronger Ahead of Tuesday’s Fed Meeting

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 09 Aug 2010 16:00:00 GMT

The U.S. Dollar is trading higher at the mid-session ahead of tomorrow’s FOMC meeting. In what is probably position squaring ahead of the Fed meeting; the Dollar is posting gains against all majors. The biggest gain coming against the Swiss Franc. The lack of fresh economic news following Friday’s disappointing Non-Farm Payrolls Report is most likely a contributing factor to the Dollar’s strength.

On Tuesday the Federal Open Market Committee is expected to consider renewing its quantitative easing program by reintroducing its purchase of government bonds and mortgages. Some believe, however, that the Fed is only going to consider extending its monetary policy rather than making an actual change. Either way, investors will be keying in on the language used by the Fed in its policy statement.

Look for the Dollar to gain over the short-run if the Fed’s remains firm in its policy statement. Any softening in the Fed’s tone will put pressure on the Greenback.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

British Pound Trying to Break Fib Retracement on Fed Stimulus Speculation

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 09 Aug 2010 11:30:00 GMT

The British Pound is hugging a key Fibonacci retracement level against the Dollar amid speculation the Fed will announce a renewal of stimulus measures to boost the economy at its FOMC meeting on Tuesday.

The Sterling is continuing its rally from Friday after forming a new main bottom at 1.5819. Trading has been light with the range tight as the market toys with a major retracement level at 1.5967. Early last week the Pound made a top at this level, leading to the break to 1.5819. The key to sustaining this rally will be a close above 1.5967. Intraday traders should watch to see if support can be established at this price level if it can be regained. The uptrend will remain intact as long as the new main bottom at 1.5819 holds as support.

Concerns about the U.S. economy weakening are helping to make the British Pound an attractive investment at this time. While the U.S. has been struggling to maintain growth, the U.K. economy has remained relatively firm.

Investors have been optimistic about the U.K. currency since the new coalition government took control in May. Although they immediately proposed spending cuts and tax hikes, investors have embraced their decisions as necessary for the economy. The fear at the time was that a growing spending deficit would lead to a downgrade of U.K. debt.

Although the U.K. economy remains on path toward sustaining its recovery, some investors still feel that some stimulus may be necessary to maintain growth. They cite the tax hikes and austerity measures as the main reasons why the economy may stall during the third and fourth quarters.

A Fed decision on Tuesday to reintroduce stimulus measures should be enough to propel the British Pound higher. Should the Fed back away from a reintroduction of stimulus measures then look for the Sterling to weaken as speculators reassess their positions. The Fed is either going to act now because they see the situation worsening or wait another month because its interpretation of the economic data does not warrant immediate action.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Euro Set-Up for Rally to 1.3510 Over Short-Run

jhyerczyk@yahoo.com (James A. Hyerczyk) — Fri, 06 Aug 2010 21:30:00 GMT

The Euro made a new high for the week on Friday, driven by disappointing U.S. jobs data. The rally through the former top at 1.3262 resumed the uptrend while forming a new swing bottom at 1.3119 in the process.

This morning the U.S. government released disappointing jobs data which solidified the thought that the economic recovery was stalling. The report which said private employers added fewer jobs during July than forecast, raised concerns amongst investors about the sustainability of the U.S. recovery.

The disappointing non-farm payrolls data will most likely be used by Fed officials next week when they set monetary policy. The weaker jobs number will most likely mean the Fed will announce stimulus measures to help revive the economy which may include renewing its quantitative easing program.

Improvements in the Euro Zone economy at a time when the U.S. economy is still struggling makes the Euro a more attractive investment. Upside momentum indicates the Euro has enough buying power behind it to reach the 50% level at 1.3510 over the near-term.

Earlier this week the European Central Bank monetary policy committee voted to leave its benchmark interest rate unchanged the historically low 1% level. This move was unanimously expected by traders.

Following the release of the interest rate decision, ECB President Trichet noted that the European bank stress tests completed since the last meeting have helped increase transparency and fueled a move toward restoring market confidence in the banking sector.

In the wake of recent strong Euro Zone economic data, analysts had expected Trichet to outline an exit strategy or discuss the ECB’s plan for its special liquidity provisions. In other words, is the ECB going to continue to provide free-flowing liquidity to the market or begin to withdraw it. Trichet indicated the ECB would consider this action on that next month.

Trichet failed to say anything really bullish about the Euro, but actually may have helped limit gains by stating that the second half of 2010 was likely to be “much less buoyant” than the second quarter because of the implementation of new financial austerity measures. He also added that it was too early to “declare victory” in the economic crisis.

Based on Trichet’s comments, the Euro is most likely to continue to be driven by economic news regarding the U.S. economy. At this time, the ECB seems a little more upbeat about the Euro Zone economy while the U.S. Fed is being encouraged to consider the renewal of its quantitative easing program to ward off a potential double-dip recession. As long as the U.S. economy remains weak and interest rates low, look for the Euro to remain firm.

The situation is not all rosy for the Euro however. Many of the recent improvements in the Euro Zone economy have taken place before financial austerity measures were in full effect. Furthermore the ECB is still providing stimulus. Like the U.S., consumer spending will be the key to sustaining the recovery. If consumers decide to pull in their purse strings at a time when the government is cutting spending, then the economies in the Euro Zone may come to a screeching halt.

Aside from the disappointing U.S. jobs data report, the biggest surprise was the loss of jobs in Canada. Throughout the entire global recession, the talk of the town has been Canada and how the country avoided a prolonged recession and banking crisis.

The USD CAD is traded sharply higher due to an unexpected decline in the Canadian jobs market. The news out of Canada reflects its first job losses of the year.

Friday’s Canadian jobs report showed that the economy lost 9,300 jobs in July while the unemployment rate unexpectedly rose to 8 percent from 7.9 percent. Analysts had predicted an increase of 15,000 jobs after a strong gain of 93,200 in June.

The Canadian Dollar fell on the bad jobs data as traders speculated the weakening U.S. economy would have an adverse affect on the Canadian economy going forward.

Based on the drop in yields and the rise in Canadian bond prices, investors are beginning to price in the possibility that the country’s recovery from the recession is starting to cool and could encourage the Bank of Canada to refrain from additional interest rate hikes over the near-term.

Traders should continue to focus on the weak U.S. economy as the main catalyst behind the movement in the currency markets. With interest rates expected to continue to remain low for a prolonged period of time and the Fed expected to remain dovish on the economy, continue to look for a weaker U.S. Dollar.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Euro Resumes Uptrend in Wake of Disappointing U.S. Jobs Data

jhyerczyk@yahoo.com (James A. Hyerczyk) — Fri, 06 Aug 2010 16:00:00 GMT

The Euro made a new high for the week, driven by disappointing U.S. jobs data. The rally through the former top at 1.3262 resumed the uptrend while forming a new swing bottom at 1.3119 in the process.

This morning the U.S. government released disappointing jobs data which solidified the thought that the economic recovery was stalling. The report which said private employers added fewer jobs during July than forecast, raised concerns amongst investors about the sustainability of the U.S. recovery.

The disappointing non-farm payrolls data will most likely be used by Fed officials next week when they set monetary policy. The weaker jobs number will most likely mean the Fed will announce stimulus measures to help revive the economy which may include renewing its quantitative easing program.

Improvements in the Euro Zone economy at a time when the U.S. economy is still struggling makes the Euro a more attractive investment. Upside momentum indicates the Euro has enough buying power behind it to reach the 50% level at 1.3510 over the near-term.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Canadian Dollar Lower as Nation Loses Jobs

jhyerczyk@yahoo.com (James A. Hyerczyk) — Fri, 06 Aug 2010 12:30:00 GMT

Despite a disappointing U.S. jobs report, the USD CAD is trading sharply higher due to an unexpected decline in the Canadian jobs market. The news out of Canada reflects its first job losses of the year.

Today’s Canadian jobs report showed that the economy lost 9,300 jobs in July while the unemployment rate unexpectedly rose to 8 percent from 7.9 percent. Analysts had predicted an increase of 15,000 jobs after a strong gain of 93,200 in June.

The Canadian Dollar fell on the bad jobs data as traders speculated the weakening U.S. economy would have an adverse affect on the Canadian economy going forward.

Based on the drop in yields and the rise in Canadian bond prices, investors are beginning to price in the possibility that the country’s recovery from the recession is starting to cool and could encourage the Bank of Canada to refrain from additional interest rate hikes over the near-term.

The weak U.S. jobs data has the British Pound in a position to challenge the high for the week at 1.5967. A move through this level will take out a swing top and a .618 retracement level. This move is likely to trigger stops and an acceleration to the upside.

The Euro has resumed its uptrend with the trade through the last main top at 1.3262. Upside momentum is building which could drive this market to the major .618 retracement level at 1.3510. The main trend will remain higher as long as the main swing bottom at 1.3119 holds as support.

Traders are watching the USD JPY this morning. The weak outlook for the U.S. economy and the shedding of higher risk assets is putting pressure on the Dollar/Yen. This morning this pair tested the November 2009 bottom at 84.83. A break through this level is likely to trigger an acceleration to the downside. Traders are approaching this level with caution, however, because of the threat of an intervention by the Japanese government. There may be a technical bounce when this level is tested, leading to a possible intraday short-covering rally.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

USD JPY Approaching November 2009 Bottom

jhyerczyk@yahoo.com (James A. Hyerczyk) — Thu, 05 Aug 2010 21:30:00 GMT

The Japanese Yen is set to rise even further especially if tomorrow’s U.S. Jobs Report is worse than expected. Furthermore, the Fed is likely to put pressure on the Dollar next week following its FOMC meeting when it is expected to announce the renewal of its quantitative easing program.

Gains in the Yen could be limited by talk that the Bank of Japan is set to intervene. Although the Japanese government is issuing verbal interventions at this time, further appreciation in the Yen may hurt exports and the economy, forcing it to act more decisively than in the past.

The U.S. Dollar traded trading mostly lower versus the major currencies today in light trading as traders curtail activity ahead of Friday’s U.S. Non-Farm Payrolls Report. The employment report is expected to show a decline of 65,000 to 90,000 jobs, pushing up the unemployment rate to 9.6%. The public-sector part of the report is expected to show a loss of at least 165,000 jobs due to government firings of census workers. The private-sector is forecast to have added at least 100,000 jobs.

The focus will most likely be on the private-sector number. It this number comes out better-than-expected, look for the Dollar to rise.

The Dollar has been under pressure most of the trading day due to a surprise drop in weekly initial claims. Unemployment benefits rose by 19,000 to 479,000 in the latest week. Pre-report estimates called for a drop to 453,000.

The European Central Bank and Bank of England monetary policy committees voted to leave there respective benchmark interest rates unchanged at historically low levels. The ECB left its key borrowing rate at 1%. The BoE agreed to maintain its 0.50% level. Both moves by the central banks were expected.

Following the release of the interest rate decision, ECB President Trichet noted that the European bank stress tests completed since the last meeting have helped increase transparency and fueled a move toward restoring market confidence in the banking sector.

In the wake of recent strong Euro Zone economic data, analysts had expected Trichet to outline an exit strategy or discuss the ECB’s plan for its special liquidity provisions. In other words, is the ECB going to continue to provide free-flowing liquidity to the market or begin to withdraw it. Trichet indicated the ECB would consider this action on that next month.

Trichet failed to say anything really bullish about the Euro, but actually may have helped limit gains by stating that the second half of 2010 was likely to be “much less buoyant” than the second quarter because of the implementation of new financial austerity measures. He also added that it was too early to “declare victory” in the economic crisis.

Based on today’s comments, the Euro is most likely to continue to be driven by economic news regarding the U.S. economy. At this time, the ECB seems a little more upbeat about the Euro Zone economy while the U.S. Fed is being encouraged to consider the renewal of its quantitative easing program to ward off a potential double-dip recession. As long as the U.S. economy remains weak and interest rates low, look for the Euro to remain firm.

The Bank of England as expected left interest rates unchanged. Traders will not be watching economic reports to see if the implementation of new austerity measures and tax hikes has an adverse affect on the economy after strong second-quarter GDP data was posted. The central bank will also continue to monitor the inflation rate which is currently above the target level.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Euro Holds Steady to Better after Trichet’s Positive Spin

jhyerczyk@yahoo.com (James A. Hyerczyk) — Thu, 05 Aug 2010 16:00:00 GMT

The U.S. Dollar is trading mostly lower versus the major currencies today in light trading as traders curtail activity ahead of Friday’s U.S. Non-Farm Payrolls Report. The employment report is expected to show a decline of 65,000 to 90,000 jobs, pushing up the unemployment rate to 9.6%. The public-sector part of the report is expected to show a loss of at least 165,000 jobs due to government firings of census workers. The private-sector is forecast to have added at least 100,000 jobs.

The focus will most likely be on the private-sector number. It this number comes out better-than-expected, look for the Dollar to rise.

The Dollar has been under pressure most of the trading day due to a surprise drop in weekly initial claims. Unemployment benefits rose by 19,000 to 479,000 in the latest week. Pre-report estimates called for a drop to 453,000.

The European Central Bank and Bank of England monetary policy committees voted to leave there respective benchmark interest rates unchanged at historically low levels. The ECB left its key borrowing rate at 1%. The BoE agreed to maintain its 0.50% level. Both moves by the central banks were expected.

Following the release of the interest rate decision, ECB President Trichet noted that the European bank stress tests completed since the last meeting have helped increase transparency and fueled a move toward restoring market confidence in the banking sector.

In the wake of recent strong Euro Zone economic data, analysts had expected Trichet to outline an exit strategy or discuss the ECB’s plan for its special liquidity provisions. In other words, is the ECB going to continue to provide free-flowing liquidity to the market or begin to withdraw it. Trichet indicated the ECB would consider this action on that next month.

Trichet failed to say anything really bullish about the Euro, but actually may have helped limit gains by stating that the second half of 2010 was likely to be “much less buoyant” than the second quarter because of the implementation of new financial austerity measures. He also added that it was too early to “declare victory” in the economic crisis.

Based on today’s comments, the Euro is most likely to continue to be driven by economic news regarding the U.S. economy. At this time, the ECB seems a little more upbeat about the Euro Zone economy while the U.S. Fed is being encouraged to consider the renewal of its quantitative easing program to ward off a potential double-dip recession. As long as the U.S. economy remains weak and interest rates low, look for the Euro to remain firm.

The Bank of England as expected left interest rates unchanged. Traders will not be watching economic reports to see if the implementation of new austerity measures and tax hikes has an adverse affect on the economy after strong second-quarter GDP data was posted. The central bank will also continue to monitor the inflation rate which is currently above the target level.

Look for sideways trading the rest of the afternoon and overnight as volume is expected to thin ahead of tomorrow’s important U.S. jobs report.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Bank of England Holds Key Rate Steady as Economy Moves into Uncertain Territory

jhyerczyk@yahoo.com (James A. Hyerczyk) — Thu, 05 Aug 2010 11:30:00 GMT

On Thursday the Bank of England policymakers voted to leave its benchmark interest rate at the historically low 0.5%. This move was expected because BoE officials are still unsure what the effect the newly implemented austerity measures will have on the economy. Furthermore, there is still uncertainty over what the upcoming new taxes will have on economic growth. Some investors feel the central bank will have to remain flexible with its monetary policy in case the developing economic recovery stalls.

Lately the British Pound has been trending higher, reaching a major retracement zone. Most of this move has been driven by speculators looking for improvements in the U.K. economy while the U.S. economy falters. The recent Second Quarter GDP Report was better than expected; leading some investors to believe the economy is on the road to recovery. Skeptics cite the fact that this reading took place before the austerity measures were implemented.

High inflation has also had investors worried. One of the challenges for the Bank of England will be controlling inflation without stifling growth. Uncertainty over how the BoE intends to do this may limit gains and could begin to put pressure on the Sterling.

Technically, the British Pound found resistance at a key .618 retracement level earlier this week at 1.5967. Holding this level could trigger the start of a break back to 1.5635. Overnight the Sterling traded below 1.5884, putting this currency lower for the week. The market bottomed early in the trading session and put in a short-term top shortly after the central bank announcement.

Although the Pound is trading higher shortly before the New York opening, gains could be limited as traders stand aside ahead of tomorrow’s U.S. Non-Farm Payrolls Report. This report will offer more insight into the state of the economy and influence the Fed’s monetary policy decision at next week’s FOMC meeting. There is speculation that the Fed will renew its quantitative easing program. This along with low interest rates could keep downside pressure on the Dollar.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

British Pound Consolidates after Weak Services Sector Report

jhyerczyk@yahoo.com (James A. Hyerczyk) — Wed, 04 Aug 2010 21:30:00 GMT

The British Pound is trading lower against the Dollar after better-than-expected U.S. economic reports regarding private payrolls and ISM manufacturing. The positive nature of both upbeat reports dampened worries about the U.S. economy’s growth.

The Sterling received its initial pressure after July services PMI posted an unexpected decline. The weakness in this number raised some concerns that the economy may be cooling down. Despite a recent rise in second quarter GDP and relatively high inflation, investors are still worried the new austerity measures combined with higher taxes will cool down the economy.

Along with the Sterling, the Euro was also down for the first day in close to a week. The weaker tone was set in the Euro following a worse-than-expected final July services PMI reading for the Euro Zone. The services purchasing managers index for the EZ rose slightly to 55.8, but fell short of a preliminary reading of 56.0.

In addition to the bearish economic reports, traders may be shedding Euros and Pounds ahead of tomorrow’s Bank of England and European Central Bank policy meetings on August 5. Both central banks are expected to keep interest rates unchanged at historically low levels. The BoE is going to address the effects of the new austerity measures and tax hikes on monetary policy and ECB President Trichet will discuss the surprise strength in the Euro Zone economy.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

U.S. Dollar Posts Strong Gains against Euro, British Pound

jhyerczyk@yahoo.com (James A. Hyerczyk) — Wed, 04 Aug 2010 16:00:00 GMT

The U.S. Dollar is trading sharply higher against the Euro and British Pound and posting a strong gain versus the Japanese Yen after better-than-anticipated reports regarding private payrolls and ISM manufacturing. The positive nature of both upbeat reports dampened worries about the U.S. economy’s growth.

The weaker tone was set in the Euro following a weaker-than-expected final July services PMI reading for the Euro Zone. The services purchasing managers index for the EZ rose slightly to 55.8, but fell short of a preliminary reading of 56.0.

The British Pound received its initial pressure after July services PMI posted an unexpected decline. The weakness in this number raised some concerns that the economy may be cooling down. Despite a recent rise in second quarter GDP and relatively high inflation, investors are still worried the new austerity measures combined with higher taxes will cool down the economy.

In addition to the reports, traders may be shedding Euros and Pounds ahead of tomorrow’s Bank of England and European Central Bank policy meetings on August 5.

The Dollar/Yen is also posting a gain today. Traders are expressing relief in the upbeat economic numbers from this morning. This up move comes one day after the Japanese government issued a verbal invention to warn about the high Yen hurting exports.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Dollar Posting Small Gain Following ADP Employment Data

jhyerczyk@yahoo.com (James A. Hyerczyk) — Wed, 04 Aug 2010 12:30:00 GMT

The U.S. Dollar is posting a small gain versus the Euro and British Pound this morning following a private employment report showing an increase of 42,000 jobs. Prior to the report, economists were looking for an increase of 40,000. The June report was revised to show an increase of 19,000 jobs versus a previous report of a 13,000 gain.

Today’s report covered the private sectors; Friday’s U.S. Non-Farm Payrolls Report will analyze both private and public sectors. Pre-report guesses for Friday’s number is expected to show a drop of 65,000 to 90,000 jobs.

Traders are now waiting for the release of July’s ISM non-manufacturing index which comes out at 9 a.m. Central time. This report should shed further light on the U.S. economy.

After a strong run due to better than expected economic reports, the Euro is under pressure this morning following a European services report which showed a rise to 55.8, but fell short of the estimate of 56.0.

The British Pound is also facing selling pressure this morning because of an unexpected decline to 53.1 from 54.4 in the U.K. July services PMI index. Economists had been looking for an increase to 54.5.

The strength in the gold market this morning may be an indication that investors are preparing to shed risk. This could put pressure on the commodity-linked currencies throughout the day.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

More Bad Economic News Drives Dollar Lower; Fed May Renew QE

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 03 Aug 2010 21:30:00 GMT

The U.S. Dollar was under pressure against most majors on Tuesday on speculation the Fed will consider renewing its quantitative easing program following next week’s FOMC meeting on August 10. Another round of weak economic data also contributed to the weakness in the Greenback which drove the Dollar to its lowest level since April against some of the currency pairs.

The Dollar opened lower and remained under pressure throughout the New York session, pressured by weak U.S. consumer spending news, a drop in home sales and a bigger than expected decline in factory orders.

The Greenback’s early morning weakness began following the release of a bearish article by the Wall Street Journal. According to the WSJ, the Fed will consider using cash from maturing mortgage-bond holdings to buy new mortgage or Treasury Bonds instead of allowing its portfolio to shrink. Insiders believe the Fed’s decision will be heavily weighted by this Friday’s U.S. Non-Farm Payrolls Report.

Some investors are questioning whether the Fed will follow-through on this symbolic event. The market has already pushed Treasury yields and mortgage yields to historic lows. Those traders who follow the interest rate differential believe the Dollar will continue to remain under pressure until interest rates begin to go up. Others believe that eventually the weakening U.S. economy will spread globally, triggering a flight to safety rally into the Dollar.

The Euro and British Pound remained strong throughout the day ahead of the Bank of England and European Central Bank policy meetings on August 5. Both central banks are expected to keep interest rates unchanged.

The BoE will report on the effects of the new austerity measures and tax hikes on current monetary policy. The big issue will be whether these reforms curtail growth. The ECB is likely to issue a statement on the state of the Euro Zone following the recent aid package to countries facing sovereign debt issues. Recently strong economic reports have surprised investors, many of whom believed the economy would slow down due to financial austerity measures.

Technically, the strong close in the Euro has the market in a position to test a long-term downtrending Gann angle from the 1.5144 top at 1.3394. Sellers may step in at this level. The British Pound tested a .618 retracement level at 1.5967. Buying seemed to dry up as the market neared this level indicating this market may have reached an overbought point.

Speculation that the weak U.S. economy will adversely affect the Canadian economy helped the USD CAD gain ground on Tuesday. The Dollar/CAD traded in a tight range, indicating it may be going through a transition period. Although no bottoming signal has been given, the inability to break this currency pair in the wake of bearish U.S. economic news may be a sign of either a shift in risk sentiment or position squaring ahead of this Friday’s U.S. and Canadian employment data.

The Dollar lost ground to the Japanese Yen despite news that Japanese Minister Yoshihiko Noda said on Tuesday that excessive, disorderly moves in the foreign exchange market were undesirable and that too strong a Yen hurts exports and households. Market participants have heard this line before which may be the reason for the reaction. This form of verbal intervention didn’t work in the past to slow down the strength in the Yen and is not expected to do so now. It seems that only an actual intervention will force the Yen lower.

Finally, last night the Reserve Bank of Australia voted to leave interest rates unchanged at 4.5%. The main reason for this action was inline growth and inflation. The Aussie surged initially on the news but pulled back from its highs throughout the session. The consensus is the RBA is very content with keeping borrowing costs at current levels until the economic outlook become clearer.

Technically, the closing price reversal may be a sign of a top. The market will have to confirm the pattern with a break through .9070. This could start a 2 to 3 day break.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

U.S. Dollar Weaker as Fed Mulls Quantitative Easing

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 03 Aug 2010 16:00:00 GMT

The U.S. Dollar is under pressure against most majors on speculation the Fed will consider restarting its quantitative easing program following next week’s FOMC meeting on August 10.

According to the Wall Street Journal, the Fed will consider using cash from maturing mortgage-bond holdings to buy new mortgage or Treasury Bonds instead of allowing its portfolio to shrink. Insiders believe the Fed’s decision will be heavily weighted by this Friday’s U.S. Non-Farm Payrolls Report.

The Euro and British Pound remained strong at the mid-session ahead of the Bank of England and European Central Bank policy meetings on August 5. Both central banks are expected to keep interest rates unchanged. The BoE will report on the effects of the new austerity measures and tax hikes on current monetary policy. The big issue will be whether these reforms curtail growth. The ECB is likely to issue a statement on the state of the Euro Zone following the recent aid package to countries facing sovereign debt issues. Recently strong economic reports have surprised investors, many of whom believed the economy would slow down due to financial austerity measures.

The Dollar remained under pressure throughout the morning, pressured by weak U.S. consumer spending news, a drop in home sales and a bigger than expected decline in factory orders.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Improving Economic Outlook Boosts Euro, British Pound

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 03 Aug 2010 12:30:00 GMT

Improving economic outlooks for both the Euro Zone and U.K. are helping to boost the Euro and British Pound versus the Dollar overnight. Both currencies continue to soar to the upside, driven by strong trend buying and the lack of overhead resistance.

Poor U.S. economic data and expectations that U.S. growth could lose momentum as government stimulus is withdrawn has led investors to speculate that U.S. interest rates will stay low for a prolonged period of time.

Even the Wall Street Journal supports the notion that the Federal Reserve will consider using cash the Fed receives when its mortgage-backed holdings mature to buy new mortgage or Treasury Bonds, instead of allowing its portfolio to shrink gradually, as it is expected to do in the months ahead.

At its next policy meeting on August 8, analysts expect the Fed members to mull over ways to stimulate the economy including quantitative easing. This action by the policymakers will be a signal that there is a deepening concern among members about the economic outlook.

Before the Fed meets, the Bank of England and the European Central Bank will have a chance to express their outlooks for their respective economies on August 5. The BoE is expected to keep its borrowing costs at historically low levels while explaining how monetary policy and growth will be affected by the recently imposed austerity measures and tax increases. The ECB will also leave interest rates unchanged at 1%, but should offer a solid explanation for the recent surge in economic growth despite talk of a slow down due to sovereign debt issues only two months ago.

No matter how you look at the central bank meetings, it is clear that the market believes that both the BoE and ECB are closer to raising interest rates than the U.S. Fed.

Overnight the U.S. Dollar hit multi-month lows against most major currencies, some of which had not been seen since mid-April. Negative sentiment is building which could send the Dollar even lower today as pessimism about the economy continues to build.

Some of the pessimism about the economy was fueled by Fed Chairman Bernanke on Monday when he told a group that the economy has yet to recover fully and monetary policy must remain accommodative. Bernanke also said it is going to take “significant time” to restore the labor market.

In other news, the Dollar is losing ground to the Japanese Yen despite news that Japanese Minister Yoshihiko Noda said on Tuesday that excessive, disorderly moves in the foreign exchange market were undesirable and that too strong a Yen hurts exports and households. Market participants have heard this line before which may be the reason for the reaction. This form of verbal intervention didn’t work in the past to slow down the strength in the Yen and is not expected to do so now. It seems that only an actual intervention will force the Yen lower.

Finally, last night the Reserve Bank of Australia voted to leave interest rates unchanged at 4.5%. The main reason for this action was inline growth and inflation. The Aussie surged initially on the news but pulled back from its highs throughout the session. The consensus is the RBA is very content with keeping borrowing costs at current levels until the economic outlook become clearer.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Weak Outlook for U.S. Economy Pressures Dollar

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 02 Aug 2010 21:30:00 GMT

This week the EUR USD penetrated the 1.31 price level for the first time since May. The primary driving forces behind this move were the better outlook for the Euro Zone economy and the weak outlook for the U.S. economy. The data out of Europe may have brought the European Central Bank closer to a rate hike than the Fed.

The GBP USD closed near the high for the week after piercing a major 50% price level. The strong close put the market over 50% of the 1.7042 (July 2009 Top) to the 1.4229 (May 2010 Bottom) range at 1.5635.

Weak U.S. economic data and a better outlook for the U.K. economy are the reasons for the strength in the Sterling. While the U.S. is still on a spending spree, the U.K. has been busy implementing austerity measures while reading for tax hikes. Bullish traders seem optimistic that these two factors are good for the economy but some traders remain skeptical that spending cuts and tax increases will curtail the economic recover.

Comments from the Bank of England this week seem to suggest that it remains cautious about the economy and is willing to continue to provide stimuli if and when necessary. Recently it was reported that the U.K. GDP rose more than expected. This provided some lift to the market but poor housing numbers seem to indicate that the central bank is still far from hiking rates.

The Australian Dollar finished near its high for the week after a two-day setback. Demand for higher risk assets was the driving force behind the rally. Earlier in the week, the Aussie weakened because CPI data suggested the economy had cooled off. This meant that the Reserve Bank of Australia would most likely refrain from hiking interest rates at its next meeting on August 3rd. Friday’s rally suggests that speculators are driving up the market because of the weak U.S. economy and the likelihood that U.S. interest rates will remain at historically low levels for a prolonged period of time.

The New Zealand Dollar closed higher on Friday after a closing price reversal top earlier in the week triggered a 3 day, 50% correction. This move is typical during a rally. The main problem, however, which suggests lower markets to follow, is the weekly closing price reversal top.

Fundamentally, the Reserve Bank of New Zealand hiked its benchmark interest rate by a quarter-point to 3.00%. The RBNZ, however, said it would most likely refrain from another rate hike because of expectations of slower growth. This news triggered the sell-off in the Kiwi. Technically, the reversal top could be a bearish sign if confirmed. The chart suggests a possible correction to .6980 over the next 2 to 3 weeks.

The U.S. Dollar traded mostly higher against most major currencies overnight but gave up some of its earlier gains early in the New York session, turning negative against the British Pound, Australian Dollar, Canadian Dollar and New Zealand Dollar while only giving up ground to the Euro and Swiss Franc. The Dollar traded weaker versus the Japanese Yen all trading session.

This morning the U.S. GDP Report showed the economy grew at 2.4% in the second quarter. This growth was at a pace somewhat slower than pre-report estimates of 2.5% to 2.7%. A first quarter revision higher may have been the reason for the limited reaction to the downside in the equity markets and the reason why the rally stalled in the Dollar.

The biggest concern at this time amongst investors is the uncertainty of future growth. Continuing to lose growth at the current pace suggests the U.S. GDP may fall below 2% during the third quarter. This uncertainty is one of the main reasons why employers may be curtailing hiring, thereby exasperating the employment situation in this country.

In other reports, the Michigan confidence index was revised to 67.8 in July and manufacturing activity in Chicago rose more than expected. The Dollar was able to hold its ground following the release of both reports.

The overnight strength in the Dollar against the majors except the Japanese Yen was triggered by weak Japanese economic news. Overnight it was reported that Japanese core consumer prices fell 1% from a year ago. May industrial production and employment were also negatives.

The Dollar strengthened further after Fed voting member Bullard said the U.S. “is closer to a Japanese-style outcome today than at any time in recent history”. He also said the best remedy for this developing problem will be another round of Treasury purchases by the Fed.

Stocks were expected to trade lower today, but a quick rally following the opening, triggered by value-seeking bottom pickers helped drive the equity indices higher. This forced short-covering rallies in both the New Zealand Dollar and Australian Dollar.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

U.S. Dollar Deepens Losses

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 02 Aug 2010 16:00:00 GMT

The U.S. Dollar remains under pressure at the mid-session following overnight news regarding a strengthening global economy and weaker U.S. business conditions in July.

Strength in the global manufacturing sector gave investors little reason to lock up lower yields, driving investors into higher yielding assets. The report also forced investors to question the strength of the U.S. recovery.

The key question remains, how long will investors continue to seek risk? At some point, like they have in the past, investors will turn risk averse, seeking projection in the lower yielding Dollar and Yen.

The Euro surged to the upside as investors had little choice but to buy the European currency following strong PMI reports from across Europe. All of the news seems to be centering on developing strength in Europe and continued weakness in the U.S.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Worries about Economy Losing Steam Drives U.S. Dollar Lower

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 02 Aug 2010 12:30:00 GMT

The U.S. Dollar is under pressure against most majors as investor concern that the U.S. economy’s recovery is losing steam drove traders into higher yielding assets. The overnight weakness in the Dollar was triggered by a better than expected economic report in Australia and a strong surge in Asian equities.

The Dollar has been under pressure lately because of a string of weak economic data while the Euro Zone economy has been showing signs of strength, driving investors into riskier assets. Another concern at this time is how long the weaker U.S. economy will continue to drive investors into the higher yielding currencies. At some point, global investors will turn their focus once again to the Dollar because of risk aversion worries.

The AUD USD rose to its strongest level in three months on signs that Asian economic growth continues to remain strong despite predictions of a slow down in China. Australian traders turned bullish after the manufacturing index in Australia rose 1.5 points to 54.4. Speculative traders are also looking for tomorrow’s Australian retail sales and building approvals to show advances for June.

On August 3, the Reserve Bank of Australia is expected to leave interest rates unchanged for the third straight month. Traders will be watching the policy statement for any signs that the RBA will resume its tightening campaign later in the year. The central bank may have to take action against a possible spike in inflation due to projected strength in the economy for late 2010 and early 2011.

Technically the Aussie continues in an uptrend. The drive through the last swing top at .9068 was reaffirmed overnight. A new higher swing bottom was formed at .8904. Continue to look for the trend to continue as long as there are higher-tops and higher-bottoms.

Although China’s Purchasing Managers’ Index was down in July versus June, the reading remained above 50 showing expansion. New Zealand Dollar traders read this a sign that demand for goods and services will remain strong. The NZD followed through to the upside after Friday’s minor reversal bottom. Strong upside momentum indicates the market may have enough juice to challenge the last main top at .7395. The main trend remains up with a strong chance a new higher swing bottom will form at .7190.

The British Pound is the strongest gainer overnight. Traders are buying the Sterling ahead of this week’s Bank of England interest rate decision. Most investors expect the central bank to leave interest rates unchanged but the key focus will be on the BoE’s outlook for inflation. The new inflation outlook will be the central banks first since the government implemented financial austerity measures. The BoE is expected to give its assessment on the effects of the financial austerity measures on monetary policy and economic growth going forward.

Technically, now that the British Pound has cleared a key 50% retracement level, upside momentum is expected to drive the market to the .618 retracement level at 1.5967 before encountering new resistance. Continue to look for higher markets as long as 1.5635 holds as support. The strong rise in the Sterling has this market in a position to post a daily closing price reversal top. Bearish traders should watch for this formation to form on either an intra-day or daily basis.

Demand for higher risk assets is driving the USD JPY higher after this currency pair reached a new low for the year on Friday. The strong rise in the equities has reignited interest in the carry-trade, fueling a sell-off in the Japanese Yen.

This week the Australian Central Bank meets on August 3, followed by the European Central Bank and the Bank of England on August 5. All three central banks are expected to leave interest rates unchanged. Following the release of their respective policy statements, traders will turn their focus toward the release of the July U.S. Non-Farm Payrolls Report.

This report will be important because Dollar sellers will have to decide whether to keep the pressure on the Greenback because of a weak economy or begin to cover their shorts because of risk aversion.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Weak Outlook for U.S. Economy Pressures Dollar

jhyerczyk@yahoo.com (James A. Hyerczyk) — Fri, 30 Jul 2010 20:30:00 GMT

Dollar Mixed after U.S. GDP, Confidence Data

jhyerczyk@yahoo.com (James A. Hyerczyk) — Fri, 30 Jul 2010 16:00:00 GMT

The U.S. Dollar traded mostly higher against most major currencies overnight but gave up some of its earlier gains, turning negative against the British Pound, Australian Dollar and New Zealand Dollar while losing ground to the Euro, Canadian Dollar and Swiss Franc. The Dollar has been trading weaker versus the Japanese Yen all trading session.

This morning the U.S. GDP Report showed the economy grew at 2.4% in the second quarter. This growth was at a pace somewhat slower than pre-report estimates of 2.5% to 2.7%. A first quarter revision higher may have been the reason for the limited reaction to the downside in the equity markets and the reason why the rally stalled in the Dollar.

The biggest concern at this time amongst investors is the uncertainty of future growth. Continuing to lose growth at the current pace suggests the U.S. GDP may fall below 2% during the third quarter. This uncertainty is one of the main reasons why employers may curtail hiring, thereby exasperating the employment situation in this country.

In other reports, the Michigan confidence index was revised to 67.8 in July and manufacturing activity in Chicago rose more than expected. The Dollar was able to hold its ground following the release of both reports.

The overnight strength in the Dollar against the major except the Japanese Yen was triggered by weak Japanese economic news. Overnight it was reported that Japanese core consumer prices fell 1% from a year ago. May industrial production and employment were also negatives.

The Dollar strengthened further after Fed voting member Bullard said the U.S. “is closer to a Japanese-style outcome today than at any time in recent history”. He also said the best remedy for this developing problem will be another round of Treasury purchases by the Fed.

Stocks were expected to trade lower today, but a quick rally following the opening, triggered by value-seeking bottom pickers helped drive the equity indices higher. This forced short-covering rallies in both the New Zealand Dollar and Australian Dollar.

If U.S. equity markets turn lower late in the session, then look for traders to become risk averse. This is likely to help the Dollar regain its upside bias while pressuring risk-sensitive currencies.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Weak Japanese Economic Data encourages Shedding of Risk

jhyerczyk@yahoo.com (James A. Hyerczyk) — Fri, 30 Jul 2010 11:30:00 GMT

Weak Japanese economic data encouraged the shedding of risk overnight driving the U.S. Dollar higher against most major currencies while pressuring the Dollar/Yen.

Overnight it was reported that Japanese economic data was weak, with the core CPI falling 1% from a year earlier in June. May industrial production and employment figures also signaled a weakening economy.

The news out of Japan triggered a sharp rise in the Dollar versus most of the major markets. Nervousness ahead of the U.S. GDP number this morning may have contributed to the weakness. Investors are looking for the U.S. to report GDP growth at 2.5% to 2.7%. The Dollar is expected to strengthen if the report comes out worse than expected. The size of the move will be determined by how much the actual report misses the estimates.

Technically, the USD JPY reversed course following the news, sending this pair to a new low for the year. Downside momentum suggests this market is on pace to test the November 2009 bottom at 84.83. A new main top at 88.11 was formed on the daily chart. The trend will remain down until this price is penetrated.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Euro Touches 1.3105; Weak Equity Markets Trigger Volatile Trading Session

jhyerczyk@yahoo.com (James A. Hyerczyk) — Thu, 29 Jul 2010 20:30:00 GMT

The Euro surged to 1.3105 for the first time since May shortly after U.S. equity markets opened, but was unable to hold this level as stocks corrected sharply during the trading session. The subsequent break triggered volatile moves throughout the session with the market retracing inside the 1.3105 to 1.3059 range several times.

The EUR USD began to break out to the upside last night buoyed by strong European earnings reports and the dim outlook for the U.S. economy. Some traders are factoring in the possibility that the European Central Bank may be in a position to raise its benchmark interest rate before the Fed acts upon the U.S. borrowing rate.

Technically the Euro is in a strong uptrend. The breakout above the last swing top at 1.3028 reaffirmed the trend as well as the crossing of the .618 retracement level at 1.2998. In order to sustain this rally, the currency has to close above 1.2998.

The British Pound traded higher but barely held on to earlier gains following a test of a major 50% level at 1.5635. Slowing the Sterling’s upside momentum today is a U.K. housing price report which showed that home values fell in July for the first time in five months. Tighter lending conditions and concerns that government spending cuts will slow economic growth were to blame for the drop.

Last week it was reported that the U.K. economy grew more than expected during the Second Quarter but that was before the implementation of new government austerity measures. Concerns that new taxes and spending cuts will hurt the economy could be the factors which contribute to the start of a short-term decline. Technically, investors should begin to watch for a technical closing price reversal top to signal the end of the current rally. At a time today, the Sterling was close to forming a reversal top, but bargain hunters were buying aggressively on the dips.

The New Zealand Dollar traded weaker versus the U.S. Dollar after the Reserve Bank of New Zealand hiked its key lending rate by 25 basis points to 3.00%. Although this hike was expected, the main reason behind the weakness is the comment from RBNZ Governor Alan Bollard. The central bank Governor stated after the report that the “pace and extent” of future increases would be more moderate than earlier projected. Investors read this a sign that the central bank will refrain from an additional rate hike at its next meeting on September 15.

Technically the Kiwi reached its closing price reversal top objective at .7211. A normal reaction to this pattern is a 2 to 3 day decline of 50% of the last swing up. Further weakness will be indicated if .7211 fails to hold as support. Weakness in U.S. equities may trigger a further decline on Friday.

Tomorrow the U.S. will release its preliminary Second-Quarter GDP Data. Investors are looking for this report to reveal a softening economy. Analysts expect U.S. GDP slowed last quarter to an annual rate of 2.5% from 2.7% in the first. A number showing a greater than expected decrease could drive equity and commodity markets sharply lower, setting off the possibility of a major flight to quality rally in the Dollar. Given the recent slew of weak economic data and dim outlook for the economy by Fed Chairman Bernanke, this is one report that should be watched carefully.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Euro Touches 1.3105; Weak Equity Markets Trigger Volatile Trading Session

jhyerczyk@yahoo.com (James A. Hyerczyk) — Thu, 29 Jul 2010 16:00:00 GMT

U.S. Economic Concerns Help Boost Euro

jhyerczyk@yahoo.com (James A. Hyerczyk) — Thu, 29 Jul 2010 11:30:00 GMT

The Euro rose against the Dollar overnight buoyed by concerns that the weakening U.S. economy may be slowing the recovery. Based on recent data and testimony from Fed Chairman Bernanke, investors are bracing for a weak Second Quarter GDP report on Friday. This is driving investors into the Euro as the Euro Zone economy seems to be improving faster than the U.S. economy leading to speculation the European Central Bank may hike interest rates before the Fed although both seem to be months away from taking such action.

Technically, after several days of beating on the psychological 1.30 price level, the Euro finally broke through taking out stops and attracting fresh breakout buyers on the move. The key to sustaining the current uptrend will be the Euros ability to hold 1.30 as support. A failure to do so will signal the end of the up move.

The British Pound is trading higher but barely holding on to earlier gains following a test of a major 50% level at 1.5635. Slowing the Sterling’s upside momentum today is a U.K. housing price report which showed that home values fell in July for the first time in five months. Tighter lending conditions and concerns that government spending cuts will slow economic growth were to blame for the drop.

Last week it was reported that the U.K. economy grew more than expected during the Second Quarter but that was before the implementation of new government austerity measures. Concerns that new taxes and spending cuts will hurt the economy could be the factors which contribute to the start of a short-term decline. Technically, investors should begin to watch for a technical closing price reversal top to signal the end of the current rally.

The New Zealand Dollar is trading weaker versus the U.S. Dollar after the Reserve Bank of New Zealand hiked its key lending rate by 25 basis points to 3.00%. Although this hike was expected, the main reason behind the weakness is the comment from RBNZ Governor Alan Bollard. The central bank Governor stated after the report that the “pace and extent” of future increases would be more moderate than earlier projected. Investors read this a sign that the central bank will refrain from an additional rate hike at its next meeting on September 15.

Technically the Kiwi reached its closing price reversal top objective at .7211. A normal reaction to this pattern is a 2 to 3 day decline of 50% of the last swing up. Further weakness will be indicated if .7211 fails to hold as support.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

RBNZ Set to Hike Benchmark Rate

jhyerczyk@yahoo.com (James A. Hyerczyk) — Wed, 28 Jul 2010 20:30:00 GMT

The New Zealand Dollar fell for the second consecutive day following Monday’s bearish closing price reversal top formation. Wednesday’s decline was blamed on a drop in business confidence, but some traders attribute the weakness to position squaring ahead of tonight’s interest rate decision by the central bank.

Over the short-run speculators have been driving by the Kiwi in anticipation of a hike in the key borrowing rate. Traders are looking for a quarter-point hike to 3 percent. The weakness in the Australian inflation rate is not expected to have an affect on the Reserve Bank of New Zealand’s decision. Recent economic data suggests that worries about inflation getting out of control are strong enough to warrant a rate hike at this time.

Overnight Australia reported a lower than expected rise in its Consumer Price Index. This is a strong indication that the Reserve Bank of Australia is going to refrain from hiking its benchmark interest rate at its next meeting on August 3rd. Traders sold the Aussie on the news. Weaker U.S. equity markets helped maintain the weaker tone in this market.

The U.S. Dollar strengthened following the release of a poor durable goods report. Economists were looking for a 1.0% increase; the actual change was reported as -1.0%. Investors did an about face following the release of this data, buying the Dollar and selling higher risk currencies. Recently bearish news regarding the economy had been driving down the Dollar. Today’s reaction indicates that investors may becoming concerned that a weak U.S. economy will slow the global expansion. The drop in equity markets also contributed to the strength in the Dollar. After the bearish report and the initial reaction, the Dollar settled into a range against most major currencies.

This afternoon’s release of the Fed’s Beige Book had a limited affect on the Dollar. The consensus is the report paints a weak picture for the economy. The market reacted as if the report was a non-event. The reason for the flat reaction may have been that this news had already been factored into the markets since economic reports have been weak and Fed Chairman Bernanke stated last week that weak employment and slow GDP growth will continue to plague the economy.

The tone in the market appeared to be pro-Dollar today which could set up for a rally late in the week once the currency pairs breakout of their trading ranges.

Technically the Euro is still struggling with the psychological 1.30 price level. It seems that a close over this level may be the only way to trigger an acceleration to the upside.

The British Pound closed higher but backed off after testing a major 50% price level at 1.5635. The driving force behind Wednesday’s strength was comments from Bank of England Governor Mervyn King.

King said he thought the 2nd quarter surprise gain in the GDP was “encouraging” but expects new taxes to keep inflation under control. This would mean the BoE would not have to aggressively raise rates to keep a lid on inflation. King also said the central bank policymakers face a “difficult” challenge as it seeks to balance the risks for the economy. This comment was very close to Bernanke’s assessment that the U.S. economy faces uncertainty.

King left open the possibility of more stimuli by stating that their remains “room” to move in either direction and pledged to take the “appropriate” steps going forward in order to encourage a sustainable recovery.

In taking into consideration the state of the economy and King’s comments, one can conclude that the BoE is likely to stay the course and leave interest rates at historically low levels. This means that the recent rally in the GDP USD was most likely triggered by a weak U.S. economy rather than speculation that U.K. interest rates would soon rise. Furthermore, King has to be cautious at this time because a combination of a rate hike, new taxes and cost cutting may be too much for the economy to handle at this time. These would be the key reasons to trigger a decline in British Pound from its current level.

As we approach the end of the week, traders should be more aware of the action in the U.S. equity markets. Today’s action wiped out the gains for the week which could be an indication that sentiment is shifting away from higher risk assets. This could pressure the Euro and the commodity-linked currencies while supporting the Japanese Yen. The strength in the Dollar could begin tonight if Asian indices decide to follow the U.S. equity markets lower.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

U.S. Dollar Strengthens after Bearish Durable Goods Report

jhyerczyk@yahoo.com (James A. Hyerczyk) — Wed, 28 Jul 2010 16:00:00 GMT

The U.S. Dollar strengthened following the release of a poor durable goods report. Economists were looking for a 1.0% increase; the actual change was reported as -1.0%. Investors did an about face following the release of this data, buying the Dollar and selling higher risk currencies. The drop in equity markets also contributed to the strength in the Dollar. After the bearish report and the initial reaction, the Dollar settled into a range against most major currencies.

The Beige Book was just released. The consensus is the report paints a weak picture for the economy. The market is reacting as if it was a non-event. The reason for the flat reaction may have been that this news has already been factored into the markets since economic reports have been weak and Fed Chairman Bernanke has stated to expect weak employment and slow GDP growth.

The tone in the market appears to be pro-Dollar today which could set up for a rally late in the session once the currency pairs breakout of their trading ranges.

Overnight Australia reported a lower than expected rise in its Consumer Price Index. This is a strong indication that the Reserve Bank of Australia is going to refrain from hiking its benchmark interest rate. Traders sold the Aussie on the news. Weaker U.S. equity markets helped maintain the weaker tone in this market.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Weaker Equities could Trigger Flight into U.S. Dollar

jhyerczyk@yahoo.com (James A. Hyerczyk) — Wed, 28 Jul 2010 11:30:00 GMT

The U.S. Dollar is picking up strength this morning as traders shed risky assets. Investors are lightening up positions because of the weaker durable goods data, but the actually selling pressure may have started last night following a disappointing Australian Consumer Price Index number. The Aussie CPI rose less than economists had expected, curtailing gains and leading to the possibility the Reserve Central Bank will refrain from hiking interest rates for the third consecutive month.

Overall, the weak durable goods report sets a bearish tone in the stock market ahead of the opening. This is likely to lead to a profit-taking break. Investors are taking a defensive position this morning. The shedding of risky assets is likely to benefit the Dollar and Treasury markets as traders seek safety in lower yielding assets.

The Euro is still struggling with the .618 retracement level at 1.2998 and the psychological 1.30 price. Although economic data in Europe has been improving while the U.S. economy weakens, upside momentum seems to be slowing indicating that sentiment may be shifting toward risk aversion at least in the short-run.

The British Pound is testing a major 50% price level at 1.5635 this morning. The main trend is up, but weakening demand for risk and technical factors may trigger a profit-taking reaction this morning. Despite an unexpected increase in the U.K. GDP during the second quarter, investors may become concerned that the application of spending cuts and higher taxes during the second half of the year may lead to a slow down in the economic recovery. These worries could lead investors to trim long positions, thereby pressuring the Sterling.

Downside momentum in the Japanese Yen has been slowing lately because of demand for higher risk assets and the renewal of the carry trade, but a sell-off in the equity markets may lead to the start of a another round of buying in the Japanese currency. Talk of a possible intervention by the Bank of Japan also contributed to the sell-off in the Yen.

Technically the Japanese Yen could be forming a daily reversal top which could lead to the start of a 2 to 3 day break.

The theme developing today appears to favor the Dollar. The unexpectedly weak durable goods data is encouraging investors to trim risky positions. This could lead to a flight-to-safety rally in the Dollar.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Euro Weakens as Drop in Consumer Confidence Drives Investors to Dollar

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 27 Jul 2010 20:30:00 GMT

After piercing a minor .618 retracement level Tuesday morning morning, selling pressure hit the Euro after U.S. Consumer Confidence fell more than analysts had estimated. The report pressured equities and drove down demand for higher risk assets.

Today’s action is significant because it shows that investors have set aside worries about the European bank stress tests and are now turning their focus toward economic reports. Traders seemed reluctant to go long this morning after the U.S. reported a slight gain in home prices and amid improved corporate earnings. This represented a shift in sentiment as earlier in the month investors chased the Euro on both good and bad news for the Dollar.

The housing report in particular was interesting because it gave hope that the housing market may be improving although at a slow pace. Although reports have been confusing to investors lately, today’s break looks as if buyers just gave up on the long side of the Euro or they are making up excuses to take profits. Today’s break also demonstrates the strong correlation between the Euro and U.S. equity markets at this time.

Technically the Euro is in a position to form a daily closing price reversal top. This could lead to the start of a 2 to 3 week break if confirmed.

The break in the U.S. equity markets is also leading to profit-taking in the higher risk currencies. All three major asset-linked currencies – Australian Dollar, New Zealand Dollar and Canadian Dollar – are in positions to post closing price reversal tops. If sentiment is turning bearish on risk then look for the start of a correction in these three markets.

The markets could move overnight since Australia is due to issue its monthly Consumer Price information. A strong number will mean that the Reserve Bank of Australia will likely raise rates at its August 3 meeting. This could ignite a rally in the Aussie and spread to other commodity-linked currencies. A lower number means the likelihood of a rate hike will be diminished. This could have a bearish influence on stocks and risky commodities.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Euro Weakens as Drop in Consumer Confidence Drives Investors to Dollar

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 27 Jul 2010 16:00:00 GMT

After piercing a minor .618 retracement level this morning, selling pressure hit the Euro after U.S. Consumer Confidence fell more than analysts had estimated. The report pressured equities and drove down demand for higher risk assets.

Today’s action is significant because it shows that investors have set aside worries about the European bank stress tests and are now turning their focus toward economic reports. Traders seemed reluctant to go long this morning after the U.S. reported a slight gain in home prices and amid improved corporate earnings. This represented a shift in sentiment as earlier in the month investors chased the Euro on both good and bad news for the Dollar.

The housing report in particular was interesting because it gave hope that the housing market may be improving although at a slow pace. Although reports have been confusing to investors lately, today’s break looks as if buyers just gave up on the long side of the Euro or they are making up excuses to take profits. Today’s break also demonstrates the strong correlation between the Euro and U.S. equity markets at this time.

Technically the Euro is in a position to form a daily closing price reversal top. This could lead to the start of a 2 to 3 week break if confirmed.

The break in the U.S. equity markets is also leading to profit-taking in the higher risk currencies. All three major asset-linked currencies – Australian Dollar, New Zealand Dollar and Canadian Dollar – are in positions to post closing price reversal tops. If sentiment is turning bearish on risk then look for the start of a correction in these three markets.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Rise in Stock Reignites Interest in Carry Trade

jhyerczyk@yahoo.com (James A. Hyerczyk) — Tue, 27 Jul 2010 11:30:00 GMT

The Dollar is trading weaker across the board except the Japanese Yen. Investors are feeling more confident about the global economic recovery and shedding safer currencies. Commodity-linked currencies are trading higher let by the Australian Dollar as traders buy ahead of tomorrow’s CPI report. A stronger than expected inflation figure is expected to solidify a rate hike by the Reserve Bank of Australia. Strong demand for equities is reigniting interest in the carry trader which is pressuring the Japanese Yen.

Investor sentiment is up this morning, driving U.S. Dollar lower in the wake of strong earnings results from European banking giants UBS and Deutsche Bank. Investors are also selling the Dollar in anticipation of strong earnings results from Aetna, Inc., Anadarko Petroleum Corp., DuPont and Lockheed although banking stocks are expected to carry the market today.

Today traders will have a chance to react to two U.S. economic reports: the Case-Shiller 20 City Index and Consumer Confidence. The Case-Shiller housing report for May is expected to rise to 4.0% from 3.8%. This will be the biggest rise in the index since September 2006. Consumer Confidence is expected to come in at 51 which is down from 52.9. A greater than expected drop will fuel concerns about a double-dip recession. Strong housing data is likely to pressure the Dollar.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Aussie Dollar Rises as Traders Chase Yields; Traders Eye Key Inflation Data

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 26 Jul 2010 20:30:00 GMT

The Australian Dollar surged on Monday as rising equity markets drove up demand for higher yielding assets. Traders are also chasing the higher yield in Australia due to the weaker outlook for the U.S. economy.

Early Monday morning, the Aussie’s rally slowed a bit due to a disappointing Producer Price Index report. The PPI rose 1.0% compared with a forecast 1.5% rise. After a slight retreat from the early session high, the market regained its momentum to test .9000 in the U.S. session for the first time since the middle of May.

Although initially concerned with the modest gain in the PPI, traders quickly turned their focus on Wednesday’s Consumer Price Index. Traders are looking for this report to show an increase of 0.8%, keeping in line with the Reserve Bank of Australia’s overall target band of 2% to 3%. A report greater than the estimate could be the trigger which gives the RBA a reason to hike its benchmark rate once again at the next policymakers meeting on August 3.

The RBA has been on the sidelines since May, choosing to ignore the economy over the short-term because of the financial problems in Europe at the time. Now that is seems the European financial system is sound, the RBA will shift sentiment back to the economy. The Australian economy has been strong but traders will have to decide on Wednesday whether it has been strong enough to warrant another rate hike based on the inflation data. A spike in consumer prices will put inflation over the target band, setting the table for a 25 basis point hike to 4.75%.

Despite questions about how the European bank stress tests were conducted, investors seemed satisfied enough with the results early Monday morning to underpin the Euro while waiting for fresh news regarding the U.S. housing market.

Following the release of U.S. new home sales data which saw an increase in June by more than economists had forecast, the Euro rallied and is now pressing a minor .618 retracement level at 1.2998. This puts this pair in a position to challenge last week’s high at 1.3028.

Stocks extended their gains following the housing report, driving up demand for higher risk assets, helping the Euro maintain the upward momentum which helped drive the market higher late last week.

The British Pound finished higher but momentum slowed when the market neared a weekly swing top at 1.5523. A breakout over this level will turn the main trend up and set up a possible acceleration to a major 50% retracement level at 1.5635.

Fundamentally the Sterling is being driven higher by last week’s release of better than expected second quarter GDP. Last week’s news that the U.K. economy expanded by a strong 1.1 percent was a sign the economy was more stable than previously estimated. This news led some investors to believe that the Bank of England will have to seriously consider raising its benchmark interest rate sooner than expected.

As the Pound approaches a key retracement level at 1.5635, investors have to realize that the second quarter expansion took place before the government implemented its proposed deep spending cuts and tax hikes. The biggest fear amongst bullish traders is that the government’s proposed austerity measures will curtail the gains that the economy is currently showing.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

U.S. Housing Report Helps Euro Extend Earlier Gains

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 26 Jul 2010 16:00:00 GMT

Despite questions about how the European bank stress tests were conducted, investors seemed satisfied enough with the results early this morning to underpin the Euro while waiting for fresh news regarding the U.S. housing market.

Following the release of U.S. new home sales data which saw an increase in June by more than economists had forecast, the Euro rallied and is now pressing a minor .618 retracement level at 1.2998. This puts this pair in a position to challenge last week’s high at 1.3028.

Stocks extended their gains following the housing report, driving up demand for higher risk assets, helping the Euro maintain the upward momentum which helped drive the market higher late last week.

The British Pound is higher this morning but momentum slowed when the market neared a weekly swing top at 1.5523. A breakout over this level will turn the main trend up and set up a possible acceleration to a major 50% retracement level at 1.5635.

Fundamentally the Sterling is being driven higher by last week’s release of better than expected second quarter GDP. Last week’s news that the U.K. economy expanded by a strong 1.1 percent was a sign the economy was more stable than previously estimated. This news led some investors to believe that the Bank of England will have to seriously consider raising its benchmark interest rate sooner than expected.

As the Pound approaches a key retracement level at 1.5635, investors have to realize that the second quarter expansion took place before the government implemented its proposed deep spending cuts and tax hikes. The biggest fear amongst bullish traders is that the government’s proposed austerity measures will curtail the gains that the economy is currently showing.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

Stress Test Results Questioned but Euro Still Higher

jhyerczyk@yahoo.com (James A. Hyerczyk) — Mon, 26 Jul 2010 11:30:00 GMT

The U.S. Dollar is also under pressure this morning. The Euro is continuing its rally after the stress tests failed to reveal any serious surprises. The British Pound is soaring, backed by positive economic data and good news regarding its stress tests. Finally, demand for higher risk is helping to drive commodity-linked currencies higher.

Traders continue to question the stringency of the European bank stress tests but this news has failed to trigger any selling pressure. Famous investor Jimmy Rogers told CNBC.com Monday that the stress tests were just a public relations exercise and weren’t tough enough. Some analysts continue to doubt that only seven of 91 European Union banks failed the test. This figure was even better than rumors circulating two weeks ago, calling for at least eleven to fail.

The point receiving the biggest criticism was the fact that a sovereign debt default in Europe had not been taken into consideration in the criteria of the test. Although the head of the Committee of European Banking Supervisors told CNBC that sovereign exposure of banks taking the test had been disclosed, other factors such as currency markets, pension funds, and fiscal problems in the U.S. had not been factored into the stress analysis.

Last week’s testimony by Fed Chairman Bernanke, calling for a weaker economy coupled with better than expected economic data from Europe is helping to keep pressure on the Dollar. Traders are starting to believe that interest rates will remain low in the U.S., while the possibility of a hike in rates in Europe and the Pacific Rim remains strong.

This morning there is only one economic report. At 10 a.m. Eastern Time, the U.S. will report New Home Sales. The consensus is looking for an increase of 6.7 percent from a month earlier. Although this seasonally adjusted figure is expected to be higher than the slow pace from May, the market remains weak now that potential buyers can no longer get federal tax credits.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved

U.S. Dollar Index Reaches Major 50% Level; Euro Survives Stress Tests

jhyerczyk@yahoo.com (James A. Hyerczyk) — Fri, 23 Jul 2010 20:30:00 GMT

The U.S Dollar Index had a roller-coaster ride this week although it managed to finish only slightly lower. Based on the November 2009 to June 2010 trading range of 75.03 to 89.22, this market is now testing a major 50% level at 82.12.

Over the past two weeks, the pace of the decline has slowed as the market approached the 50% retracement level, but following this week’s inside trading range, may be set up for an acceleration to the downside. A break through 82.12 is likely to trigger a sharp break into the next retracement level at 80.45.

Traders should turn their attention to this index this week because of the possibility of stronger than average volatility and the potential for a support base to form between the 50% and 61.8% retracement levels at 82.12 to 80.45.

The Weekly Euro had a volatile, two-directional trade this week, ping-ponging between a 50% support level at 1.2783 and a 61.8% resistance level at 1.2998. Technically, the weekly chart formed a closing price reversal top, but will have to trade through 1.2732 to confirm it. A confirmation of this pattern is likely to trigger a 2 to 3 week correction back to 1.2452 to 1.2316.

A failure to confirm the reversal top and a close over 1.2998 will be a bullish signal. Look for an acceleration to the upside if this occurs since the chart indicates no major resistance on the weekly chart until 1.3510.

On Friday, the Euro was up in early session trading in a continuation of Thursday’s strong rally before jitters about today’s stress tests triggered a profit-taking correction. From an early session high at 1.2965, the Euro broke to 1.2793 shortly after the New York opening.

The EUR USD spiked to 1.2910 immediately after stress test results began being released, but sold off quickly as traders were disappointed with the results. Although only a small number of European banks passed their stress tests, investors remained skeptical about the methodology used by the regulators. Many viewed the guidelines used as too easy on sovereign debt.

As expected, Germany’s HRE, Greek’s Atebank and Spain’s Banca Civica failed their tests, but most banks passed even in hot spots such as Greece and Spain.

The biggest concern for investors was that stress tests excluded the possibility of sovereign debt default. Sovereign debt held in portfolios was distinguished from sovereign debt held to maturity. Debt held for trading is expected to be marked to market; debt held to maturity is not.

The problem with this separation into two different types of debt means that it is possible that losses by banks will be underestimated. This could hurt the financial health of European Banks and undermine the credibility of the banking system.

The concerns being raised by investors put pressure on the Euro at the mid-session, but a late session rally in U.S. equity markets triggered a short-covering rally in the Euro, pushing it higher for the day. While the news about the bank stress tests is unsettling, risk takers decided that nothing out of the ordinary was revealed so traders turned their attention to higher risk assets like U.S. stocks in what can best be described as a relief rally.

The British Pound rallied sharply higher on Friday versus the U.S. Dollar and the Euro. Friday’s rally was ignited by the news that the U.K. economy grew almost twice as much as economists forecast in the second quarter in the fastest expansion for four years. The strongest gains were seen in the services, manufacturing and construction sectors.

The bullish economic news out of the U.K. was damaging to the U.S. Dollar because it was solid proof that the economy was recovering at a time when the Fed was forecasting a weaker GDP for the U.S. Friday’s report may be the evidence the Bank of England needs to begin hiking its historically low benchmark interest rate. In the meantime, the Fed is pondering applying more stimuli as well as renewing its quantitative easing program. Treasury market traders are already pricing in a rate hike for September 2011, this is up from an earlier forecast of Spring 2011.

The improving economy and the possibility of a sooner-than-expected rate hike make the GBP USD a more attractive investment at this time. Technically, the Pound/Dollar had an inside week which indicates impending volatility. The strong close puts this market in a position to take out the April swing top at 1.5523. A breakout above this level may run into selling pressure inside of a major retracement zone at 1.5635 to 1.5967.

Although the initial reaction to the stress tests was bearish for the Euro, traders quickly realized that the news was already in the market. In my opinion, European Central Bank President Trichet’s comment earlier in the month that banks would need to raise capital and a rumor last week that eleven banks would fail the test was spot on. Today’s report revealed that seven institutions didn’t have enough capital and may need to raise more than $4.5 billion.

Analysts around the globe are saying that the stress tests weren’t stringent enough and that the release of the results failed to alleviate market concerns about the banking system’s vulnerability to sovereign-default risk. Nonetheless, investors spoke today by trashing the Dollar and rallying stocks, this could be an indication that they have put the tests behind them and are turning their focus on the global economic recovery. This means that economic reports are likely to carry more weight in the weeks ahead.

The risk of trading Forex and Futures can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. www.patternpricetime.com © Copyright 2008-2010. All rights reserved