What started out to be a sideways day ended with the U.S. Dollar taking another hit as investors renewed their quest for risk late in the trading session and into the close.

Even before the U.S. Forex trading session started there were signs that today would be an unusual day as stories were circulating that CIT Group would file bankruptcy following the news that the U.S. government would not provide assistance to them. This triggered an almost immediate flight-to-safety rally as traders flocked to the U.S. Dollar and Japanese Yen for safe-haven protection.

Later in the morning session but prior to the New York opening JP Morgan Chase announced better than expected earnings. This news froze the markets as it created a desire for risky investments but traders were still worried about the CIT news.

Throughout the trading session, upside momentum began to build when finally the equities markets took off to the upside triggering a break in the U.S. Dollar. The Japanese Yen which had been trading higher most of the day reversed to the downside as investors once again sold in an effort to draw a better yield.

Higher-yielding currencies such as the New Zealand and Australian Dollars also posted gains as traders chased these markets higher into key retracement zones. Retaking these technical levels would be strong signs that these currency pairs will test new highs for the year fairly soon.

In economic news, the U.S. Initial Claims report showed that more jobs were lost. This helped weaken the Dollar as traders looked toward the British Pound and Euro for better appreciation. Both of these markets are also at or approaching key retracement levels that will dictate the direction over the next few weeks.

Despite a rebound in crude oil prices, the Canadian Dollar was unable to overcome technical resistance and traded flat to lower into the close.

Looking at the chart patterns, it appears that the clash over the next few days will be between the fundamental and the technical traders. Both types of traders can build both bullish and bearish cases. On the bullish side, the desire for better returns driven by better than expected U.S. earnings reports is helping to support the current rally. Bearish technical traders cite the fact that the major currencies are merely making retracements of their two year ranges and not new highs for the year as the reason why they are vulnerable to a correction from current levels.

Unless there is earth-shattering fundamental news, continue to look for the major Forex pairs to remain range bound. Some traders remain skeptical about the global economy and may not be willing to chase these markets at current levels. If buying dips is the preferred trading strategy then look for another short-covering rally in the Dollar to develop over the short-run.

Please do not hesitate to contact us at 1-800-971-2440, with any questions.

DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee from B.I.G. Forex, LLC and Brewer Investment Group, LLC or its subsidiaries and/or affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of positions such as spread or straddle trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.