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The Markets Need To Back 20 Red Flag Releases In Two Days Last Week
A swing change in the near-term will now test the 4 hour momentum that for the past two months has been building a short dollar bias. The last two trading sessions have absorbed twenty red flag economic releases, which is more than the total amount coming in whole of the next week of trade. The balance of technical swing change and fundamental drivers comes into its own at times like these, with the easiest way to find sentiment being through S&P Futures trade.
If global equity markets move higher, and the Usd does not get sold on Sunday/Monday then we get a fairly good read; the 1 hour trend-lines and buy/sell channel areas will create strong resistance to any major pairs wanting to move against the dollar this week, TheLFB Trade Team said. However, if we see higher equity trade, and the Usd gets sold we will view last week's Usd buying as a chance for the major pairs to bank profit, let off some steam, and then look to challenge the near-term resistance put in place on Thursday and Friday.
Watch the daily chart RSI indicators for the price action as the 50% areas are hit; these are respected indicator levels that will have the market’s attention. The 50% area will create one of two things; a bounce that sends the major pairs higher against the dollar on strong equity days, or a flat-line reaction that holds the dollar index at 80.00 support. It may be very hard for the Usd to appreciate much further than Friday's highs without having a reversal. Whatever the sound bites say, and whatever the Administration says, a strong dollar policy is definitely not what is in place, and is not what the economy needs right now.
The global economy may need a strong dollar to reduce oil and gold prices, and to keep dollar based Reserve values in check, but history shows that the most productive periods of U.S. economic growth have come from a sustained period of Usd weakness; this period of trade business cycle trade is highly unlikely to be any different at all. Time will tell, but 75.00 on the dollar index may be seen before 85.00; the recent dollar bounce came from oversold dollar conditions, it was easier than normal for the majors to lose ground because of that.
Monday brings the cold reality of a 9.4% unemployment rate that is backing massive GDP-to-Debt ratios, and as such the test of resolve of Usd buyers will be heavily tested. Negative equity trade may be the thing that supports the dollar, but keep an eye on the reaction to positive equity trade. the Trade Team said.