High volatility and heavy fluctuations are seen across the market today, where no blizzards or holidays managed to stop the market from the strong movement. Despite the thin trading volumes the movement remained heavy today and the sentiment is obviously anti-dollar!
The market is seizing the opportunity to continue the correction and send the dollar to the ground as it loses the bullish momentum rapidly, where frankly, nothing has changed just the low volume is the main steroid for the market and is magnifying the moves!
Ahead of the reports expected to show a drop in US house prices the dollar surrendered its gains against its major rivals and slumped to a new record versus the swiss franc! The dollar index which tracks its performance against six of its major counterparts slid for the fourth day, the longest stretch of losses since September 29. The index touched the low of 79.59 and hovering around those areas at 79.61 down from the highest recorded at opening levels of 80.27.
The market climbed mainly on the back of the weak dollar as the greenback seizes the opportunity to continue the needed correction. The market instability remains very evident ahead of the start of 2011 which is not expected to be a walk in the park either! The global recovery is intact, but surely NOT ROBUST, the debt crisis is contained but sure NO RESOLVED and that is already determining a bearish insight into 2011!
We can see that the intervention were absolutely fruitless for both the BoJ and the SNB as both haven currencies continue to soar to new territories. The Swiss Franc today appreciated to a new record versus the dollar reaching the strongest at 0.9431 where the pair declined from the high today of 0.9640 and currently still hovering strong around 0.9453 as the dollar remains fragile.
Swissy is trading around critical areas and a daily closing for the USDCHF below 0.9460 areas will confirm the continued bearishness over intraday and short term basis driving the franc to new all time records.
The dollar also extended the losses against the Japanese yen where the USDJPY pair declined heavily to set the low of 81.81 from the early high of 82.84 and currently hovering around 81.88. Momentum indicators entered oversold areas over intraday and daily basis yet no reversal signals are seen and stability below 82.95 and the strong breach for 82.30 will support the downside move further towards 80.35 areas and might extend further as far as the dollar maintains this weakness.
As for the common currency, it also advanced on the back of the battered greenback as the downside revision to the French GDP was not enough to weaken the currency. The market offset the debt crisis for now as the euro corrects to the upside from oversold areas over daily basis which might increase the volatility further as momentum indicators enter overbought areas over intraday basis. The euro advanced to strike the highest of 1.3274 after setting the early lows of 1.3157.
The pair is currently hovering around 1.3260 and confirming the stability above 1.3240 will reverse the movement to the upside strongly and offset the effect of intraday overbought momentum signals as the pair will continue to the upside.
Regarding sterling, the trading volumes remain low with UK markets also closed today as they return to the market tomorrow and expected to remain with light volume still ahead of the New Year weekend. The pair also inclined to strike the high of 1.5510 after sterling recorded the low of 1.5410. The pair is still below the critical areas around 1.5510-1.5565 where breaching above its high and stabilizing above those areas will revive the bullishness for the pair while if the pair does not attack the 1.5510 areas again and remain below those levels the bearishness remains in favor, though with the prevailing dollar weakness the likelihood is strong for the pair to reverse to the upside and accordingly we need to observe the pair closely.