Today€™s US Dollar Trading

€¢ FOMC announces QE, agrees to buy US Debt

€¢ Majors rally hard past most key resistance

€¢ Volumes likely higher

Overnight Preview

€¢ Look for follow-on selling of USD overnight

€¢ Expect high volatility

Looking Ahead to Thursday

All times Eastern (-4 GMT)

€¢ 8:30am USD Unemployment Claims

€¢ 10:00am USD Philly Fed Manufacturing Index

€¢ 10:00am USD CB Leading Index m/m

€¢ 10:30am USD FOMC Member Tarullo Speaks

€¢ 10:30am USD Natural Gas Storage


Is everybody happy? The US Fed today announced that they will be buying US Debt in huge amounts starting today and the result was a massive exodus out of the USD. Equities responded positively although more will need to be seen if investors view the progress as net-positive for equities near-term. The Greenback reversed mid-day gains as traders bailed on long USD positions and despite volatility it should be clear that the USD has more to go. Aggressive traders can hold open shorts in the USD through the end of the week as more longer-term traders have to bite the bullet and liquidate losing longs. GBP rallied through several layers of resistance after holding a dip into tech support mid-day at 1.3850 area; high prints are still coming but at this writing the printed high was 1.4266 with tech resistance due around 1.4320; although with the speed of the move likely those offers have been pulled. Same story in EURO I think, high prints at 1.3445 with more highs likely during overnight action. EURO is up in areas not seen since the last rally suggesting that offers likely have been pulled also. USD/CHF has failed from the highs as expected but low prints at 1.1381 likely will give way to more overnight. USD/JPY is lagging the break as bulls likely have stepped into the fray and bought the break. Low prints at 95.65 are currently holding but a close under the 96.00 handle would be a significant low as the rate has made new monthly lows on this move. Exporters will likely lean on any rally so aggressive traders can add into the close in my view. USD/CAD also on the defense with low prints under key support of 1.2520; low prints at 1.2470 with more coming overnight in my view. Aggressive traders can sell more on the close if we can close under 1.2520. In my view, the Fed decision to move to a QE stance has probably converted the market sentiment of €œflight to quality€ back to €œUSD trend lower€; it might take time for the market to fully appreciate the depth of the flood of USD coming but the underlying fundamentals support this I think. I would look for any appreciable rallies in USD the next few weeks to attract selling now and an overall downtrend to develop again. Look for further declines overnight but volatility will be high so pick your sell points in the USD carefully. Aggressive traders can add to all open USD shorts on the close today.

Forex Trading Analysis written by Jason Alan Jankovsky, featured by