European trade on Wednesday has offered a really undecided forex session, with very little near-term bias either way being shown on the dollar at the moment that looks easily capable of following through. The charts are showing that they could just as easily make the next leg of dollar buying as they could dollar selling, with most pairs now running sideways as we head into the main part of Wednesday’s European trade.
The U.S. Treasury auctions are probably supporting the buying of dollars right now, they are over-subscribed by 2:1, and that may be negating the Short-Dollar moves that would normally come from a Long-Equity environment. The 20 Day SMA areas on euro, swissy and aussie are creating turbulence at 1.2700, 1.1670, and 0.6430, with not much seeming to want to easily follow through from these price points.
There were some unusual moves that took the market off guard just before midnight EDT, and we really have not seen anything other than those ripples caused by the big stone dropping into the Forex Pond at that time to buy dollars. The U.S. equity Futures market is dropping, indicating a lower Wall Street start, and it will be interesting to see whether the majors can drop lower in-line with them because there really may not be too much underneath the lows of last week for the market to work with on the majors.
The dollar index is strong at the moment but still unable to make the next leg higher, and the longer it continues to fail at breaking 90.00 the easier it will end up being for a short-sided test of support to happen. Overall we have a Long-Dollar environment, but not one that looks any stronger or weaker than in recent trade, and that may then lead to a whole lot of nothing until the oil inventories come out of the U.S. at 10:30 EST on Wednesday.