European Market Dominance

The overwhelming and dominant factor of the Euro Zone has moved the financial markets for quite sometime now. The economic correlation between the major trading partners and the contagion effect will not easily be set aside even with the economic reports generated in the United States. However, with the Memorial Day holiday will somehow shorten the immediate reaction of the prices with the ISM figures and the Non-Farm payrolls due the end of this week's trading.
Although, the irony of the matter is the end of the months prices for the currencies may well be a correction from their low levels and the opening prices will also be well bid since the beginning of the month's trading is within the week's opening levels. confusing some traders and the continued reluctance of investors to hold and build positions on extensions of prices for the Euro against the USD in particular.

In certain trading cases such as this, what would be the most advisable criteria to focus on should be the USD Index that may provide some direction for the major currency. Although, the Chinese Reminbi or Yuan should be considered to be included in the basket as a dominant trading partner for the US which also carry a high degree of US Treasuries that finances the majority of the trade deficit with the US. this issue has not been brought up but should really be included in the market analysis of trading the foreign exchange market as a whole.

From our most recent YouTube forex video presentation of the USDX remaining strong, we have indicated the possibility that whenever the NFP provide a positive figure for the week's report this may well be the added fuel to accelerate the USDX to its initial target of 88.80. Others may disagree as to where this figure came about. Although, the historical parameters then will show that a certain equilibrium price relative to the rest of the currency figures shows that the US dollar index at this price levels would have indicated the extension of prices for the Euro and the Pound to be in line with their historical figures given a relative 90% accuracy which we have used since we have found and used these figures ever since we have been trading the market. As to when such figures for the USDX to reach this number of 88.80 may also depend on the volumes and open interest which subsequently the June contract month may also be within striking distance of the price before the end of the contract month for June 2010.

In essence, we will focus on this very indicator for now and using our relative one page indicator to show the price relationship and market behavior of the prices as each pair moves with and against the USDX until the end of this month for June.

Please review our forex video at http://youtube.com/megatrade101