The US Dollar is taking a beating this morning. USD weakness since Friday has been extraordinary....certainly an interesting market to return to after being away for over 2 weeks! The EURUSD and AUDUSD in particular are nearing interesting levels. The EURUSD has slightly exceeded the 5/21 high (12824) and near term levels of interest are now the 5/15 high at 12868 and the 5/11 low at 12904. The AUDUSD is nearing the trendline that extends off of the August highs, 7/19 high and 8/15 low (10444/55). I'll maintain a bearish bias against 10550 (8/23 high and incidentally the day that I left for vacation).

Some other things to consider ahead of Thursday's much anticipated Fed circus:

-NZDUSD is 40 pips from its August high while the AUDUSD is 170 pips from its August high; is another divergence in the works?

-Given the extent of USD weakness today, I find it odd that gold has yet to reach its 1755 objective (breakout from August) / 1760 pivot area...maybe these levels (and perhaps 1800) are reached on an initial Fed reaction Thursday in a classic 'buy the rumor, sell the news' dynamic.

-The USDJPY is nearing the June low and remains on track for a drop to record lows...and probably a sharp increase in volatility.

EURUSD - Daily Bars


Prepared by Jamie Saettele, CMT

AUDUSD - 240 Minute Bars


Prepared by Jamie Saettele, CMT

To contact Jamie e-mail Follow me on Twitter @JamieSaettele

To be added to Jamie's e-mail distribution list, send an e-mail with subject line "Distribution List" to

Jamie is the author of Sentiment in the Forex Market.

Meet the DailyFX team in Las Vegas at the annual FXCM Traders Expo, November 2-4, 2012 at the Rio All Suite Hotel & Casino. For additional information regarding the schedule, workshops and accommodations, visit the FXCM Trading Expo website.