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CME Closing Market Commentary

Discussion in 'Forex Discussions' started by forextrends24, Jun 24, 2009.

  1. forextrends24

    forextrends24 New Member

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    Today's Forex Analysis summary.

    Trader uncertainty over tomorrow’s Fed statement and concern over rising Treasury yields and the government’s ability to cover its debt obligations contributed to the weakness in the U.S. Dollar on Tuesday.

    The uncertainty is coming from one group of traders that wants the Fed to announce an exit strategy while another group is hoping the Fed steps up its Treasury purchases.

    The start of a record Treasury auction today raised concerns that the government debt was growing too large to finance. Some traders fear that a debt rating service would eventually have to flag the U.S. as a credit risk.

    The September Euro traded sharply higher as traders bet the Fed would leave interest rates at current levels and announce tomorrow that they would most likely hold off increasing rates until early next year. The Euro got an additional boost on the thought that the European Central Bank would also leave interest rates unchanged even though it has room to cut.

    The key area to watch for resistance is 1.4100. Traders get nervous when the Euro is trading in this area out of fear the European Central Bank would try to talk it down. Some traders fear that Euro Zone exports would slow down if the price of the Euro were allowed to rise. The main trend is down, but a trade through 1.4166 will turn the main trend up and indicate a test of 1.4327 is likely.

    The September British Pound continued to maintain its bullish status on Tuesday. For the second time in a week, traders could not break the support at 1.6208. The strong close indicates that the buying may continue tomorrow as this market is within striking distance of a pair of main tops at 1.6620 and 1.6658 Based on the current chart pattern, strength is likely to develop on a breakout over 1.6694. The first sign of weakness will be a failure to hold 1.6208. If downside momentum builds then the break may accelerate to 1.6110.

    Weakness in the equity markets contributed to the rally in the September Japanese Yen. Japanese investors are selling Dollars during this week phase in the stock market in order to preserve capital. The lack of trader demand for risky assets is also putting downside pressure on the market. A key retracement level at 1.0458 was broken with conviction. This price is now support. Based on the strong close, a further rally to 1.0598 is possible.

    A rebound in commodity prices helped the Canadian Dollar gain ground against the U.S. Dollar. Technically, the main trend is down, but today’s closing price reversal bottom indicates the possible start of a correction of the .9143 to .8636 range. This would set up a retracement zone at .8889 to .8949.

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