Economy outweighs QE2 & European Contagion

USD Lost ground!

As of now, the negative figures and mix reports from the unemployment claims, retail sales, GDP, the housing / home sales figures and specially the consumer spending missed it numbers have led the US Dollar to move ever closer to it second smaller wave lower as we have expected. Although, the timing couldn't have made it better as the US market prepares for a long holiday weekend and the closing / opening of the month of June is in between a squeezable shorter & tight trading schedule for next week.

As most analyst have been eyeing on the market reversal for the US Dollar with the end of the QE2 prompting a positive tone for the US dollar to strengthen further. However, as much as we wanted to be convinced, that major corrective move higher for the USDX was merely a signal that it does have room for a recovery. But in any major trend there is a major correction occurring within. The same is true with the EURUSD & GBPUSD respectively, which still is within it true bullish trend. However, the only reason why they have been correcting is the European debt crisis and the previous negative statements from Eu officials prompting the Euro to move lower. Making market sentiments to shift from time to time as the consolidation, wider price swings and fluctuations were made to confuse the market participants.

As we have been caught once to earlier due to the degree of difficulty in analyzing the timing rather than the market trend direction. However, the true sentiments still remains the same, based on our May 24th market analysis that the European currencies are still heading on it northernly directions higher. And the signals and confirmation came through on the 26th of May. Although, the end of the month will fall on a Tuesday were most traders would not make any serious decision in the market.

Now with that said, the crucial closing for the month and the succeeding trading weeks in the next two weeks would likewise be critical for the GBPUSD and the EURUSD to have another major correction within as the end of the 2nd quarter comes simultaneously with the end of the QE2. However, market sentiments would prevail by that time and a lot of our traders out there loves to speculate a market trend reversal ahead of time. The trading activities and price behavior for the coming week would be a pivotal point as to the trend's directional movement. Although, we have some market outlook in mind already but would rather wait it out until the week's trading ending the 3rd & 10th of June, 2011.

Please watch for our next couple of market view reports regarding the market on our network site.