Technical

US Dollar at Risk for Further Declines versus Euro on FX Positioning
Euro Will Struggle to Develop a Trend with Greece Back in the Headlines
Japanese Yen: Speculation for Intervention to Intensify Ahead of BoJ

The dollar put in for a cliff hanger end to the trading week. In an otherwise quiet market, the greenback finally broke from the bonds of congestion that a few prominent pairs have maintained for weeks, and in one case, months. Yet, for those that are trying to discern the currency’s direction, it may surprise them that the move break was a bearish one.

There is a growing divergence in the state of the financial market’s fundamentals and its general level of activity. In the past week, there have been developments that have degraded the fidelity of the Euro Zone, leveraged the threat of a financial crisis in China and added risk to the very assets that are used to establish risk-free returns.

Volatility perked up modestly for the active NYMEX crude contract Friday such that the market would test a new eight-week high of $83.16 before reversing course and potentially forging a bearish breakout. With the week’s close pulling the market below a trendline that has guided the commodity upward for over a month now, a speculative barrier has been removed. What is needed now is momentum; and such 

Swiss Franc Vulnerable As SNB Threat Grows

Fundamental Forecast for Swiss Franc: Neutral

Japanese Yen: Speculation for Intervention to Intensify Ahead of BoJ

Fundamental Forecast for Japanese Yen: Bearish

Markets activity has quieted down into the final few hours of trading in the Forex. We will have a weekend report for you tomorrow with a preview of next weeks opportunities.

Today also the final day for the 8% funding bonus at FXDD. You can all of the details at www.fxdd.com if you are looking to open an account today. Greg Michalowski will return on Monday.

 The USD/JPY reversed earlier gains as it looks to continue the current bullish trend. Last week we pointed out a divergence between the pair and equity markets as an opportunity. We finally saw the expected yen weakness as the pair caught up with rising equity markets soaring over 200 pips. Dollar/yen has seen its correlation with risk jump to 48% from 34% a month ago as the pair continues to see its traditional relationship re-established.  U.S. interest rate expectations have dimmed from a month ago when we saw the Fed raise the discount rate which has also seen its influence on price action diminish. 

The GBP/USD has been in an upward trend for much of the past two days. Looking at the 5 min chart, we can see that the pair has worked its way higher inside of a channel. The bottom side of the channel has been supported with 3 tests. The pair broke above the channel this afternoon and then failed to break above resistance at 1.5215. This will be the key level traders will be watching. Above this, there is good room for a short term trader on the way to major resistance at the 50% retracement level from the daily chart at 1.5272.

The USD/JPY hit hard resistance at 91.07 and fell quickly back to trendline support at 90.96. The pair has held the 100 Hour moving average for over a week with only one break below, early in today’s session. The pair has climbed almost 300 pips since March 4th. Support will be found at the 100 Hour MA at 90.30 and then down at the 200 Hour MA (89.74) On the top side if the pair can break 01.07, resistance will be found at 91.87 which is the 200 Day MA on the daily chart.