Ahead of a U.S. jobs report that is anticipated to be as poor as any in recent memory the Usd is coming under early selling pressure from the major pairs. We have been commenting for two weeks about the fact that the major pairs are not being as easily sold on negative equity days, and in the week of regional interest rates it seems as though the markets may be ready to test support on the dollar index. Whether this leads through to a sustained break of the four hour charts that at the moment still have the Usd in control may be decided by the direction of European equity trade. If the recent selling is reversed on Friday it could be that a sizable move could be made on the greenback.
U.S. debt is looking expensive to buy, the economic outlook is no better than any other region, and it does look as though the rescue packages being put into place globally will lead to regional currency appreciation. We could be at a massive dollar swing point. The bear market in equities is still dominating forex trade, and is still allowing very little price action to follow through and hold for more than a session. Right now, the market looks to be forced into dollar buying to hedge falling equities, and however tedious it feels each day that move is getting all of the attention.
The market signaled in trade on Wednesday, Thursday, and Friday that it is willing to sell the dollar on days that equities find buyers. Asian trade initially showed that although still dominant in the mid to long-term the greenback now has a near-term dollar index outlook that will question the resolve of those long the Usd if global equities can string together two days of gains. It seems strange that there can be a bullish fundamental undertone possibly bubbling underneath the majors when the technical indicators are looking so washed out, but the dollar index has held 88.00 for longer than it would normally hold a price point; something has to give, and it may be the Usd/S&P link.