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The ability to overshoot the target is what forex valuations are known for, and then, because of moving too far, too fast, they are prone to longer phases of sideways consolidation. That is exactly what the currency market achieved in trade overnight, and into the U.S. session. The trade team have been updating on the fact that the major pairs have hit the outer bands of the 4 hour chart ranges, and would need strong equity moves to easily break and hold. The news from Australia overnight empowered the last test of that resistance, and if had come on a strong session of global equity trade the majors may now be consolidating on the other side of the 4 hour channels.
As it played out, the test of forex resistance against the dollar came at a time that European cash, and U.S. futures markets were undecided on strength, momentum, and sentiment, and as such the reversal to support was far easier to achieve, just as soon as a fundamental driver showed itself.
The perfect reversal storm was then empowered by a miss on the Conference Board's consumer confidence numbers, and that was all it took for equity and commodity traders to take profit off the board, and by default create an automated order snowball that sent the major pairs to the lower part of the week's trading range. Bearing in mind that the Conference Board surveys roughly 0.0005% of the population, and we get to see that the instigator of the closing of short-dollar profit, that turned into long-dollar buying, gold selling, oil selling, and banking of equity profit, was possibly a little overblown.
Most currencies have bounced long against the dollar from these price areas in recent trade, and unless a wall of volume hits Wall Street at the close of the NYMEX at 14:30 EDT, there looks to be just as much chance of this move reversing back to dollar weakness as anything else. At very best it was a move that allowed profits to be banked, cleared out the weak hands, gave the perma bears something to write about, and for pro traders offered the chance to assess momentum and sentiment.