Euro and swissy lead the Usd strength overnight, and pushed again in reaction to the daily London fixings where oil, gold, and LIBOR, rates are set between 10:30 and 11:00 local time, that tends to draw in a momentum move from U.S. futures markets. The overnight moves have been European pair based; the cad, aussie, and yen have not moved at all. Equity markets are higher, oil is holding steady, and gold is trading around main support at 870; things that would normally be testing the resolve of dollar bulls, but not today.
The reason for the drop is reaction to a speech by Jean Claude Trichet, the head of the ECB, who failed to convince the market ithat the central bank has interest rate policies in hand said TheLFB-Forex.com Trade Team members. The moves are very speculative, and could have spun either way, but now that the downside has created momentum it may be hard to reverse before the week's trading closes. Cable and swissy got caught in the euro downdraft, all tarred with the same brush in the thinking that if the Euro-zone has an issue, then by default the U.K. and Swiss do too.
Traders will have to wait unto the Wall Street open to see whether flat-lining futures numbers can turn into positive equity trade, if so the Europeans may try to reverse the moves put on them. There may however just not be enough hours left in the week to achieve that goal, and it may leave the 4 hour technical charts going into full short mode as the new week starts. This is a swing point on the European pairs that will be interesting to minitor, and that may lead to plenty of momentum next week,
The main euro numbers to watch will be closing under the 1.3170 area, the 100 day Simple Moving Average, something that has not beem done since the middle of March the trade team said. That may signal a gap lower in trade on Sunday that will start a new story of movement. Cable has gone from being the most bullish major to now another pair that is struggling to make ground against the Usd, and reflects the fact that the dollar will remain the dominant currency pair for a little while longer it seems.