The EUR USD continued its sell-off on Thursday after turning the main trend down on the daily chart earlier in the week.
Downside momentum indicates that the break is likely to continue down into an uptrending Gann angle from the 1.2644 bottom at 1.3544 on Friday.
Based on the main range of 1.2587 to 1.4282, the retracement zone at 1.3510 to 1.3434 is also a potential downside target.
USD CHF Posts Daily Closing Price Bottom; Likely Position Squaring ahead of NFP Report
Profit-taking and position squaring ahead of Friday’s U.S. Non-Farm Payrolls Report helped form a daily closing price reversal bottom in the USD CHF on Thursday.
This could be something minor or it could be the start of an overdue correction. It all depends on how traders read Friday’s U.S. employment report.
Euro Reverses Course; In Position to Test Major 50% Level at 1.3510
A German business climate survey came in above expectations reversing the Euro and sending it higher. The strong rally in the Euro brought it closer to a major 50% retracement upside target at 1.3510. The overnight move also erased Thursday’s negative tone which was triggered by a bad PMI number.
Dollar/Yen in Position to Post Weekly Closing Price Reversal Bottom
September Crude Oil in Position to Test 50% Level at 80.90
Demand for higher risk assets and the assumption the global economic recovery is back on track helped to drive up September Crude Oil on Tuesday. After forming a secondary higher bottom at 71.92 early last week, the main trend turned up when the market crossed the last swing top at 77.84. The chart is now indicating the market is on pace to test the 50% level at 80.90.
Increased Risk Appetite; Position Squaring Boost Equities
U.S. equities are called higher this morning after posting a strong gain on Wednesday and a follow-thorough rally last night. The stable Euro is contributing to the rally along with position squaring ahead of Friday’s U.S. Employment Report. In addition, traders seem to be getting a little more optimistic that the global economic recovery is getting back on track based on fairly decent U.S.
Late Equity Market Surge Put Stocks in Strong Position
A late surge in U.S. equity markets helped put the three major indices in a strong position to challenge their highs for the year. Traders looking for increased risk drove equity markets higher from the start on Tuesday although there was a little pause in the upside momentum at the mid-session.
The U.S. Dollar is down sharply overnight against most major currencies on end-of-the-year position squaring. Although the Dollar is about to close lower for the year versus most currencies, this month it has shown signs of bottoming because of the improving economy and the possibility of an interest rate hike by the Fed earlier than previously estimated.
The U.S. Dollar overcame early weakness to post a weekly closing price reversal bottom. This move doesn’t turn the trend to up, but is a strong indication that the Dollar will rally for 2 to 3 weeks. A follow-through rally through .7734 next week is needed to confirm the reversal bottom. The main trend will turn up following a breakout over .7997.