The U.S. Dollar posted a strong gain today and is now in a position to close higher for the week.  A weekly closing price reversal could indicate the start of a 3 to 4 week rally. Investors are not too happy with the projected pace of the global economic recovery.  Many cite yesterday's action by the Fed as a sign that the recovery will be slow and labored.  Investors also fear that the global economy may not be able to sustain itself if government stimulus plans are lifted.

The GBP USD suffered the biggest loss on Thursday following negative comments from Bank of England Governor King.  King said that he supported a weaker currency. Traders believe that his comments mean the economy is still weakening and the Bank of England is not in a position to end its stimulus programs for some time.

The EUR USD weakened as commodity and equity markets lost favor with investors.  Less demand for higher yielding assets will likely keep pressure on the Euro.  Don't expect a long-term change in trend, but watch for consolidation over the short-run.

The Canadian Dollar was also down substantially as U.S. equity markets collapsed along with crude oil.  The Canadian economy will take a big hit if crude oil prices drop substantially.  The inability to reach new lows in the USD CAD despite several attempts to do so is likely to trigger a short-covering rally as bears give up on further downside movement over the near-term.

The USD JPY finished the day slightly higher as gains were limited by repatriation of Yen by Japanese corporations.  This market posted a weekly reversal bottom last week.  Today's action indicates that a secondary higher bottom may be forming.  A higher close for the week will be a strong indication that this market is on pace for a 2 to 3 week rally.

Weaker equity and commodity markets helped drive down demand for the higher yielding NZD USD and AUD USD.  Both of these currency pairs are in a position to reverse the week to down.  This topping pattern will indicate the start of a 3 to 4 week break. 

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