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Flight to Safety Rally Drives Dollar Index through Retracement Level

Discussion in 'Forex Daily News & Outlook' started by forextrends24, May 5, 2010.

  1. forextrends24

    forextrends24 New Member

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

    The fall in the price of gold and crude oil helped drive the USD CAD sharply higher Wednesday morning. After changing the trend to up on the daily chart on Tuesday following the breakout over the last swing top at 1.0215, bullish traders set their sights on the March 26th top at 1.0302. Upside momentum took this price out fairly easily, taking out stops on the penetration. The rally continued until just before the major 50% level at 1.0366. At this point, gold and crude began to rally and weak shorts began to take profits. At the close, the Dollar/CAD was higher for the day but well off its high.

    Weaker gold, crude and equities should help to trigger a further rally in the USD CAD. After building a support base in April, this pair appears ripe for even stronger upside movement. Gold may rally because of hedging against the demise of the Euro; this may help to limit losses in the Canadian Dollar.

    The weakening Canadian Dollar is most likely pleasing to the Bank of Canada which hinted last week that a strong currency is likely to have an impact on inflation and monetary policy. This led this analyst to believe that the BoC was intervening to weaken the Loonie. Look for the USD CAD to continue to strengthen unless there is renewed demand for higher risk assets.

    Read full article at ForexHound.com as well more Forex Trading articles including Forex Technical Analysis and Forex Education

    Disclaimer: Trading foreign exchange on the margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore should not invest money that you cannot afford to lose.

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