All it took was the announcement by President Elect Barack Obama concerning the $300 billion tax cut to move markets across the globe from currencies to stocks. We still see the dollar on the rise as majors are attempting to recover some of the previous losses recorded earlier in the session.
After the sharp decline witnessed on the Euro versus the dollar, it failed to find any support from fundamentals to help recover losses as today was a fundamental free calendar from the Zone. The fall was seen excessive as the pair entered an oversold area on the daily and four hour charts on the stochastic indicator where it was also limited by the lower Bollinger band on the daily charts at 1.3542 which is just below the intraday low at 1.3551. Although momentum indicators show the need for an upside correction, the ADX indicator still shows the potential for further declines where if the pair was able to breach the above mentioned support, this will open the way for the pair to decline to 1.3480s at the very least.
Concerning the royal pound, it was the only currency that was able to hold on as it continued to fluctuate sideways around the 1.4510 level which has become a support and resistance level throughout the day. A neutral trend is seen on the relative strength indicator and stochastic indicator suggesting the continuation of the sideways pattern but contradicting signals are seen on the direction indicators which could mean further volatility and fluctuations in the markets. Until we see a specific signal to identify a direction, the pair will remain within this channel.
Finally, the USD/JPY yen spiked to record an intraday high at 93.56 but has currently slightly declined after entering an overbought area on the daily charts to currently face a strong resistance at the 50 day MA at the 93 levels. It seems that the pair still has an opportunity to incline further but before doing so, it will have to decline to 92.60s at the very least to shake off the excess buying orders and gather enough bullish momentum before rebounding back to the upside to retest the resistance level at 93.50 where if breached will open the way to the 94 levels