Thursday, June 6, 2013

Dollar crashes but wait till tomorrow

ECB meeting sparked a sharp sell off in the US dollar. BOE rate decision wasn’t followed by much volatility and neither was ECB announcement. However, after the press conference sharp moves rocked US dollar. Pound and Euro soared against the greenback and so did almost all currencies. Japanese Yen was the strongest among the majors. However, by looking at price action you see that some of profit taking from the sell off has taken place. Just look at 4 and 1 hour candles to see that. Some big boys have already closed their positions. 

Nobody wants to stick their necks before tomorrow when traders are going to see what state US job market is in. The downtrend in the dollar may continue. However, I should say that most currencies have reached their resistance. If you look at gbp/usd daily chart you see it hitting important resistance and 200 simple moving average. The same can be said about Euro. Most claimed that they saw head and shoulders pattern in the pair. It looks that the picture is distorted now and Euro is more bullish than ever. But let us not rush forward with conclusions. Let the market decide where it wants to go tomorrow.