The USD's ability to hold as an alternativeflight to quality investment has not failed so far, as the contagion over the European Debt crisis weighed heavier. Although with some modest gains in the US economy, the serious threat for a slow down prevails in the mind of the investors and mainstreet.
The spill over effects on prices can be seen and felt as stocks deteriorating over confidence and the Foreign exchange market has affected the much of the Euro and Cable. EURUSD low has reached its extensions at the 1.3236 nearing our target objective of 1.3180 as written on our Follow-up Analysis 09.27 market view report.
In essence, our outlook remains well in place as we pursue our remaining positions on the EURGBP cross rate shown on the left hand side figure. Whereas the opening of the new month for the fourth quarter of the year would carry the negative market sentiments from last week's closing for the third quarter and for the month of September. The two earlier positions on the figure shows the the target objective at the 0.8550 which has been achieved as of this writing. We shall be assessing the volatility index, volumes and open interest on the futures inverse price chart and compare its configuration with the Inverse relation with the USD vs. the EURO. However, the next S2 target levels would well be at the 0.8405/10 range and extensions lower depending on the velocity of short-covering and speculative trades.
The current working price for the EURUSD at 1.3250 rests on an extension support from the previous week's low on January 16, 2011. Will extensions may trigger 1.3180 may find some light liquidation and speculateive longs merely based on oversold market conditons. This goes the same with Cable except that a probable corrective movement higher should not be discounted on a daily basis. A steadier market tone for Cable may well be investor's reluctance to follow through with speculative shorts at current market conditions.
Nonetheless, sustaining our AUDUSD call to continue it's downward trigectory since last month remains intact with the continued strength of the USDX as it gains momentum higher. The Ladder-like manner on the chart formation as we have aslo indicated from the above link report has shown its true colors. The daily candlestick bar formation on the US Dollar Index have shown as the support level S1 now would stand put at the 78.80 while gaining its strength towards the next R2 range levels of 81.05/10 basis point. Please visit our video support on the USDX 0919 Market Analysis / 8 Technical tools Applied on Youtube.
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