Microsoft, Amazon and American Express announced worse than expected earnings after the close today forcing a gap lower opening in the stock indices in early trading. This could help trigger a flight to safety break tomorrow in the Forex markets which should help the U.S. Dollar and the Japanese Yen erase some of this week's losses.

There really has not been a lot to analyze or write about this week as most of the trade has been dominated by risk/no risk trading. When Forex traders want risk they've been selling the Dollar. When they want protection, they buy the Dollar and the Japanese Yen.

For most of Thursday, the Dollar was trading weaker as Foreign Currency buying was being driven by the strong surge in the equity markets. At about midsession, the Euro started to top and began to accelerate to the downside almost as if traders knew that the Microsoft news would be bearish.

The blow to the EUR USD was just another sign that traders do not like the long side of the Euro at current levels. The June high at 1.4337 continues to remain an important resistance area that cannot be penetrated. One is beginning to wonder if the European Central Bank has something to do with the inability to break this level. It is no secret that the ECB doesn't want to see a runaway market to the upside because of the negative impact a high priced Euro may have on Euro Zone exports.

A similar situation is also developing in the Canadian Dollar market. Although it looks as if the Canadian economy is turning the corner, many traders feel that the pace of the recovery is being held back by the rapid price rise in the Canadian Dollar. This type of observation is sometimes a precursor to a verbal intervention by the Bank of Canada. This means that short USD CAD traders should be careful holding on to their shorts too long or adding to their positions at current levels.

Tomorrow could be a tricky day because of the weakness in the equity markets overnight. Traders may see a volatile two-sided market tomorrow as stock traders may drive equity markets higher early in the trading session to test today's high before selling off late in the trading session. This action in the equity markets may fuel early weakness in the Dollar early in the trading session only to find strength develop later.