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Overall, the dollar index showed some signs of weakness during the overnight session, as the S&P futures and the European markets extended the global rally, and investors were looking to buy higher yielding currencies. During the European session, the market was sent back into risk-aversion mode for a short period, following the much worse than expected GDP report, but so far, the market is continuing the prior trend of selling the dollar. Ahead, the market is expected to retain the same momentum during the U.S. open, but then slowly fade out as Friday’s close approaches.

The Euro (Eur/Usd) gained a little more than 80 pips during the overnight session, as the market seems to be in a risk-tolerance phase. Despite this, over the last few trading sessions, the single currency moved lower against the dollar, even though the global markets were buying risk at a strong pace. Ahead, the euro has to take out the 1.4250-1.4300 area in order to move anywhere higher.

The Pound (Gbp/Usd) was sold off sharply during the European session, after a report showed that the U.K. economy contracted 0.8% in the second quarter, much more than expected. This report had strong consequences in the forex market, as it caused the major currencies to retrace some of the pips recently gained. Currently, the pound is trading above the 1.6425 area, which may provide a strong support area for now.

The Aussie (Aud/Usd) had weaker than usual momentum during the overnight session, something that helped the pair to advance only 50 pips. Despite this, the pair still managed to retrace every pip it loss in the previous day of trading, on Thursday. In order to move anywhere importantly, the aussie will have to first break free from the range of the last few trading sessions.

The Cad (Usd/Cad) moved only lower throughout the European session, even though the other major pairs retraced some pips after the poor U.K. news reports. Right now, the cad is trading near the 1.0850 area, where the pair topped during the prior U.S. session. If the cad breaks and moves lower, it would reach the lowest value since October 2008. 

The Swissy (Usd/Chf) moved lower during the European session, managing to test the 1.0700 area, where the pair topped over the last few days of trading. Interestingly enough, the cad and swissy were the two pairs less affected by the poor U.K. GDP. 

The Yen (Usd/Yen) fell down to the neutral pivot point (94.60) during the Asian session, but then failed to continue moving lower, since it was trading against the general direction of the overall risk-tolerant market. On the daily chart, the yen is caught between the 20 and the 200-day moving averages.

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