Post-Market Insight: Bernanke

USD-EUR-GBP-JPY
Reading the post-market behavior after the Fed Chairman's comments have reflected the undertone of its monetary policy. While sparking a rapid decline for the USD, where trader-investors rushed for short-covering actions when the European majors rallied more than half-way through their declines.

The USD's initial decline have touched our low objective @83.05 and continued with an opening gap in the Asian trading session today. While price action after the opening levels started moving higher providing a corrective decline contrary to its European counter-parts with the EURUSD @1.3026 from a high @1.3205.

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Next Level Analysis ll

Comparative Approach: DX EURO DJ-FXCM USD:

The market has been fixated on the upcoming FOMC report that would probable dictate the outcome of the financial market this week. Although, the G8 summit meeting is focused on the Middle-East crisis and comments indirectly affecting commodity prices that would add to a volatile oil and gold prices is expected.

This would also provide some insights to the FED's clearer "Taper" time-direction from the FOMC that would make market price volatility in the coming days. But in the absence of major reports for now, market prices moves within a tighter range before any major moves are done.

In the inverse monthly chart figure 1; the correlation of the Spot USD Index (Black Line Graph) overlay with the Euro (Japanese Candlestick )provides an indication of the USD weakness more than the Euro have been supported both by fundamentals and technical analysis. And with the increase volume since the start of the year; the first quarter were USD friendly and a major corrective decline have emerged before the end of the 2nd quarter of June as volume again builds-up in line with increase market volatility. Click to continue

Market's Price Behavior 5.31

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The recovery of the US Dollar have was renewed and accelerated after stronger Chicago PMI numbers. Today's economic reports were obviously mixed. Meaning that the Fed would remain on its path to taper-off asset purchases for the year.

The recovery in the USD was likewise supported by the upward revision of the University of Michigan's Consumer Confidence index. Although, the preliminary numbers showed that consumer sentiment improved significantly in May. But the other story affecting the euro today were Bank of Italy Governor Visco's comments on the potential for another rate cut which affected the EURUSD more than the disappointing umeployment data earlier during the European session.

As the Euro dropped to as low as 1.2943 after the statements; affecting the EURGBP cross rates to move lower as well @0.8527. Although, a slight recovery did occur after the news, but the USDx recovered from its lows @83.00 levels and currently working its price back up to the all important levels @83.50 basis point. Meanwhile, the EURGBP cross have likewise recovered from a low @0.8527 and is currently @0.8550 to this writing. Click to continue

Trend Following: Chart OVERLAY ANALYSIS: EUR GBP USD.5 31

This is an update supporting our Market view analysis: OVERLAY ANALYSIS: EURGBP Cross-EURO vs. USD Index Confirms: Breakout dated: May 21,2013