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Crude Oil Surprise Reverses U.S. Dollar

Discussion in 'Forex Daily News & Outlook' started by forextrends24, Aug 20, 2009.

  1. forextrends24

    forextrends24 New Member

    Mar 27, 2009
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    Today’s sample of Forex Analysis from ForexHound.com

    A surprise decline in crude oil inventories led to a reversal to the downside in the U.S. Dollar on Wednesday. Crude oil rallied sharply higher triggering rallies in the equity and currency markets on the notion that trader demand for higher risk assets would increase.

    Higher equity and energy prices helped the EUR USD gain ground throughout the day in a combination of short-covering and fresh buying. Many Euro traders had been leaning to the short-side prior to the crude oil news because a sell-off in the Chinese stock market overnight. This weakness helped create a risk adverse environment and traders were selling in anticipation of less demand for higher risk assets. The bullish news regarding crude oil inventories caught early sellers by surprise forcing them to cover their newly initiated short positions. The main trend is down on the daily chart. Without a follow-through rally overnight or tomorrow expect the trend to continue down.

    Stronger equity and energy markets helped weaken the USD CAD. The U.S. Dollar was trading better against the Canadian early in the trading session, but the bullish crude oil news forced weaker USD CAD longs out of the market. The next two days will determine if the trend is turning back down or if today’s action was an aberration.

    Read full article at ForexHound.com as well as Forex Analysis, Forex Education and exclusive timely market Gann Analysis

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