Business-Insider

For weeks the posts on our site have been centered around a Short US$ Trend that will offer 'Bounce Days', and today Traders have another one. Some reasons could be:

* Oil prices are pulling back from all-time highs, and that automatically creates Long US$ positions; Sell Oil in US$’s = Long $. That is one of the reasons that the US$ is strengthening today.

* As the US session gets underway the price of Gold is sitting at $750, a drop of $14 in quick time. That move has helped strengthen the US$ and put the Aussie under pressure. Selling Gold positions creates a Long $ position, another reason that the US$ is having a Bounce Day.

* Equities look weaker in the near-term, US Markets have followed Asia and Europe lower. The commodities to benefit are the US$, (as the Markets turn Risk Averse selling Oil, Gold and Equity Long positions), and the Japanese Yen. The first currencies to get liquidated are the higher yielding ones (Pound, Aussie, Kiwi).

* The Dollar Index is Trading higher on Monday, and the Yield on the 10 year Treasury Note is just turning positive, indicating that the bounce on the Dollar maybe more inline with Oil and Gold falling dramatically, than the initial move to Treasuries, but that is righting itself. As soon as the Dollar Index and Treasury Yields get back inline, which they look to be now doing, the next leg of Dollar strength may happen.

Monday is showing the $ sitting in the positive, a sign that the Market may be looking to move to US Treasuries as an alternative to Equities. Oil and Gold Long positions being sold are creating $ strength, and giving Traders a very strong $ Bounce Day, even if the economy looks weak, the respect for the $ Globally cannot be underestimated, although it is being challenged.

The Europeans are sitting at Daily SMA areas, as are the Yen Cross Pairs. A close below them today really could draw Technicals and Fundamentals together for some heavily confirmed moves.

The Gap yesterday on Cable got rejected as it hit the Daily chart resistance just above 2.0500. It now looks to want to test the lower part of the Daily Chart Channel at 2.0250. The Swissy gapped lower and straight into Support from July, it then failed and was sent packing. The Euro gapped into all-time highs and failed. The reasons for failure are that protective Institutional Resting Orders were not initiated, and the likelihood was that on a Sunday evening whilst Europe and the US were away from their desks that the US$ Index would not collapse, and the gaps would be filled.
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Analysis by TheLondonForexBlog.com
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