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Overall, the dollar strengthened against the major currencies, posting some of the strongest gains of the last few weeks. The major currencies were driven lower by the falling S&P futures and by the huge declines seen in the commodity market, which usually strengthen the dollar and the Japanese yen. Interestingly though was the fact that the yen also declined against the dollar, something that does not happen very often in a day when the global markets headed lower.
The euro (Eur/Usd) tumbled 150 pips, dragged lower by the declines seen in the equity and in the commodity markets. For now, the pair is trading close to the support area formed by the 20 and by the 50-day moving averages, which may continue to hold it throughout the Asian session.
The pound (Gbp/Usd) traded in a 100 pip channel on Wednesday, delimited by the neutral pivot point (1.6455) and by the TheLFB S1 (1.6355) areas. Interestingly enough, the pound was the only major pair that was not able to set a new low during the U.S. trading hours, something that denotes the strength of the support area. During the European session, a report showed that consumer lending dropped to the lowest level on record in June, while mortgage approvals rose to the highest level in 14-months.
The aussie (Aud/Usd) headed lower during the European and the U.S. sessions, but had a relatively flat session during the Asian trading hours. On the daily chart, the pair is trading close to the 0.8100-0.8150 area, which was the support area of the channel seen during the previous week of trading. As a note, the aussie has tumbled the most today in almost a month.
The cad (Usd/Cad) gained 130 pips during the intra-day session, the most since the beginning of July. Moreover, the pair advanced on Wednesday for the first time in 9 days, after it made a doji-star pattern on the daily chart on Tuesday, which usually denotes the market’s indecision. The vast majority of the gains came during the second part of the day, as crude oil tumbled nearly 6% on Wednesday.
The swissy (Usd/Chf) headed higher most of the day, especially during the European and the U.S. sessions, gaining nearly 160 pips. Interestingly enough, the pair opened the day near the 1.0750 area, but now it is trading close to the 1.0900 resistance area, both of which have acted as majors swing areas over the last few months of trading.
The yen (Usd/Jpy) had a range of about 130 pips during the intra-day session, but still traded within the high and the low of the prior day of trading. For now, the yen is trading close to the 200-day moving average, which proved to be a very important swing area over the last period. The yen will need strong momentum to move higher, something that may come during the next few days of trade.
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