The greenback struggled to hold its ground on Tuesday, with the Dow Jones-FXCM U.S. Dollar Index slipping to a fresh yearly low of 9,682, but we may see the reserve currency consolidate over the next 24-hours of trading as it remains oversold
Hope was high for those looking for risk trends to find momentum after Friday’s impressive close. With the Dow Jones Industrial Average closing at a near, four-year high and AUDUSD (representing carry interest) overtaking a multi-month of its own, it seemed as if capital markets were charged for the next bull phase
We ended Friday with a strong signal of continuation for risk appetite trends with a Dow Jones Industrial Average and AUDUSD push to new highs.
As we have advocated in the last two editions of Weekly Focus, the arguments for buying the dollar have faded going into 2012. Not as a result of Europe’s debt profile becoming more sustainable but as a result of improved global economic data and a more aggressive easing of monetary policy by the major central banks.
The greenback bounced back on Monday, with the Dow Jones-FXCM U.S.
The erratic downside ratchet for the Dollar continues from the the last interim 1.0160 high. As each leg of this decline to the upside and the downside has developed in a 3 wave format, we suspect a Diagonal wedge pattern best defines the price action. The A leg would be complete with the drop to 1.0050 and the B wave with the erratic rally to fail 1.0160.
Though the dollar ended Friday in the red, its performance was too bad. A sharp correction of intraday gains for the Dow Jones FXCM Dollar Index would leave the benchmark in the red, but it nevertheless ended well off the week’s lows
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