USD Still In Control

Same story, same pattern of trade, just a different day. The global markets are absorbing many fundamental challenges that just did not seem important when speculative interest was pushing equities higher, albeit on low volume, and global growth was unquestioned. The consolidation of those moves and the positive thought process came in April, and in May the markets reversed gears, sold risk, saw global growth as tepid at best, and allowed the speculative interest to build on the short side of risk.

A short-sided global market, where stocks are more easily sold than bought creates a forex arena that will find it hard each day to break and hold the previous session high and low. It also creates volatility in the fact that pre-market trade, or futures trade, has all of the momentum that cannot be matched when the regional cash markets open.

The 21:00, 02:00, 07:00, 11:00, and 14:30 Et moves are volatile, and are reversing the pattern of trade that came just before, and that that is how things will stay until the inter-bank starts lending to one another, and the cost of insuring risk exposure reduces. Look to bank at 20-25 pips a percentage of any forex trade, and do not expect the previous session high/low to easily break.

The major forex pairs and the overall dollar index outlook remains the same going into the week of U.K. and Euro-zone interest rate decisions, and unless a break on S/P trade above 1075 or below 1035 can happen soon the currency markets will be buying support and selling resistance at the previous session high and low on each pair.  Usd/Jpy is at 91.40 support at the 100-day SMA, Usd/Cad has the 200-day SMA as support at 1.0460, but outside of those two, most forex pairs are now free and clear of Daily chart price points of note.