Market Analysis & Outllook

The overall fundamental reports towards the end of the week between consumer confidence, rate decisions, US GDP ( Gross Domestic Product ) and the 2nd bout of G20 head of states meeting have moved the market almost in a speculative stance. Speculation has prevailed the market sentiments not to mention the position adjustments being made towards the end of the week and month of trading volatility. Risk appetite has remained with bias bullish for the European majors despite of the overwhelming sentiments of uncertainty contrary to a positive outlook that there will be a compromised resolution to the sovereign debt crisis.



US Dollar Index Daily Chart 10.24



The lack of conviction to re-establish its trend for the US Dollar remains in the market. The US Dollar Index has maintained its lower price levels as seen at the 76.14 basis point, relatively too close for comfort and the likely scenario as some traders may retest its lower band purely on a technical basis. The Daily candlestick formation shows the complex head and shoulders formation with the support levels found at the 75.85 - 76.05 daily range extensions. Take a closer look at the rising channel from its previous low where a consolidation was made prior to the rally that the US Dollar did before changing its course lower from the top.

However, who would take up the risk of selling the US Dollar at this levels is the question. The USDX does have an extension below the 76.05 which apparently would cause some probable market capitulation for short-sellers of the Euro. As the EURUSD have extended its price levels from the important 1.3880 and is now at the 1.3915 a slight break of its resistance line as indicated on the chart. Expect a volatile end of the week & month trading as position adjustments would be made. Volumes would suddenly appear within this period of trading sessions with investors makes and shift funds between asset class and liquidity positions by then.

Meanwhile the continued strength of the Japanese has been in the limelight although subdued by the European debt crisis and the rescheduled meeting this o|ct 26 from the G20 leaders. Currently, at the 76.05 levels with a registered low at 75.78 last Oct. 21; the sustaining imbalance between bulls and bears do remain as reluctance prevails in the Asia Pacific region of the outcome of the coming meeting. The bias technical bulls for the Yen to appreciate remains a stronghold by speculative institutions / banks in the market place. The technical configuration remains to the downside for the USDJPY as momentum deteriates and not a lot of speculative positions establish at this level.