Dollar Extends Gains As Europe Goes Home

The US dollar has enjoyed a firm tone in the North American morning, but once European markets closed for the day with the 11:00 EDT/15:00 GMT fix, the dollar has extended its gains. The next level of support for the euro is the lows set in late July near $1.40. Ahead of that is a trend line drawn off of the early and late July lows, which comes in near $1.4080. Sterling is flirting with the $1.6500 level. Strong support is not seen until closer to $1.6350. Meanwhile the dollar has recouped most of its losses against the yen, but cross rate demand for the yen may prevent the buck from breaking above the JPY98 level.

FX participants are closely watching the dollar and euro's performance after the banked on relationship--equities and euro move together--broke down before the weekend. Even though the build in short dollar positions picked up in the CFTC Commitment of Traders report were likely washed out, the short-term market is still thought to be short dollars. That said, hourly momentum studies warn that the dollar is over-bought here and warns against chasing the dollar higher at this juncture.
Dollar Extends Gains As Europe Goes Home Dollar Extends Gains As Europe Goes Home Reviewed by magonomics on August 10, 2009 Rating: 5
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