After a one-day reprieve, the U.S. Dollar traded under pressure once again throughout the day. Yesterday's upside action was a reaction to positive comments from Russia regarding the status of the Dollar as the world's reserve currency. Nonetheless, traders appeared to be a little nervous today about holding Dollars while the BRIC nations met to discuss the status of the Dollar as the world's greatest currency.
Brazil, Russia, India and China will be meeting to discuss the status of the Dollar as a reserve currency. Traders took precautions ahead of this event just in case something negative comes out of the meeting.
Despite what these nations say about the Dollar this week, the real evidence of how they feel about the Dollar will come out at next week's Treasury auction. If Russia decides to back away from the auction and buy less than expected then look for weakness to develop in the Dollar.
Two reports today helped keep the pressure on the Dollar after the lower opening. Today it was reported that U.S. inflation was under control and that housing may be posting a turnaround. Both of these reports were indications that the U.S. economy was beginning its recovery.
Last week the Dollar rallied as traders started to buy the greenback in anticipation of a stronger economy. Today's reports indicated that traders may be a little more reluctant to commit to the long side in the Dollar until more solid evidence is presented.
Recapping the trends so far this week ......
The EUR USD turned its trend down on Monday when the market crossed 1.3804. The trend will turn up on a trade through 1.4177.
The trend is still up in the GBP USD. The Main Trend turns down on a trade through 1.5801. The uptrend will resume if 1.6663 is violated. Based on the current formation, one can see that the British Pound is the strongest currency at this time.
The USD JPY is in an uptrend, but going through a corrective phase. The next upside objective is the swing top at 99.75. At this time the trend is in no danger of changing to down. The closest swing bottom is at 99.45.
The main trend has turned to up in the USD CAD but the market is struggling at a short-term retracement zone. The charts indicate there is still more room to the upside, but the Dollar is going to have to get support from weaker commodities.
The higher bottom at 1.0649 in the USD CHF is an indication that this market is getting ready to turn the main trend to up. All this market has to do is produce a higher top with a move through 1.0986.
If trader appetite for riskier assets continues to fall, then look for the AUD USD to challenge the last swing bottom at .7828. A trade through this level will turn the main trend to down and trigger the start of a substantial retracement.
Today's trading action in the NZD USD has produced a lower top at .6467. This is an indication that the trend is getting ready to turn lower. A trade through .6151 will turn the main trend down. Lower equity markets and commodity prices are likely to trigger an acceleration to the downside.