Balancing Signals

With the reinforced dollar decline from the beginning of the year of 2009 and gained a more significant momentum on the 3rd quarter; the US dollar as represented by the USDX have plunged in an orderly manner to the psychological support price of 75.90 basis points.

This may probably be the higher bottom from the all time low of 70.90 historical low, although there is no actual justification on this regard but can only be speculated as such. As shown on the USDX chart as of October 12, 2009 the USDX is making a normal reaction after a downturn.

On a cyclical level the downturn towards the low is aligned with the quarter ending of the year which our research have concluded that such a slow US dollar recovery may still be possible in a slower pace.

Alignments on the US dollar movement is also in sync with the other foreign currencies making record levels like the Gold prices at the levels of USD 1,061.50 new highs, the USD/JPY at the levels of 87.11 established at the same week when the USDX registered its 75.91 low as of the end of Oct. 09,2009. In tandem with this movement is the USD/CHF move to its price levels of at 1.0180 low; also made it interesting because based from the past trading experiences this have occurred more in line with the move of the US dollar Index.

And not leaving out the performance of the Aussie Dollar and the New Zealand dollar where registered highs was also established at 0.9088 and 0.7451 respectively. so we may anticipate a much anticipated corrective movement this coming weeks ahead short of a market correction based on economic indicators. .

With the GBP/USD corrective movement back down to the 1.5705 price levels helped the dollar temporarily before it would start moving back to its major trend upwards to the initial target of 1.6380. As for the EUR/USD since it has been the pace setter for most of the cuurency other than the JPY strength vs. the USD; the initial target objective would be 1.4880 or better.

Although, the more significant remarks from the Fed Chairman Ben Bernanke and the unexpected narrowing of the US trade deficit did help boost this recovery although seen as a temporary relief by most analyst. Yet the underlying sentiments for the USD to further erode still persist in the market place until some real recovery can be seen by investors and consumer confidence would be stable to higher as measured in the volumes and openinterest in trading activities.

Watch the fundamental economic reports that may try to sustain the US dollar's recovery to justify the technical outlook in the next few weeks towards the closing of the year.

Good Luck and Happy Trading !