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The power of central banking order flows was seen in early European trade, with the automated move that pushed the Usd lower, and the European pairs higher in value. Aussie played catch-up, cad stood still, and yen looked lost trying to find a direction. The move was swift, it generated automated trade that increased the liquidity to levels not seen in eight weeks, and now will just need to pull back, find support, and then very likely will be added to.
However, the corresponding moves in global markets was not as strong, and in some cases not seen at all, and therefore we have confirmation again that the forex markets are not yet leading global trade, they are still following. Unless equity and oil markets pick this forex move up, and start to increase buyers in-line with it, there is a danger that the break-out may not hold support. The initial break that we have been calling for is here, now the market needs to back it, or reverse it.
We have seen one pull-back, if that can show us it can now hold, we will start the Signal process. It will be worth the wait because this 0.5% break-out by the European pairs will pale into insignificance if it can be backed now by the global markets. If this is the next leg of dollar index drop, it could easily be for 5.0% over the next quarter.