spite stock markets rally, dollar moves higher

Wed, Mar 11, 2009

Usually when wall street closes so deep in the green, we get a counter reaction in the forex market, as traders dump safe haven dollar in favor of riskier trading alternatives.

This was not the case yesterday, while the Dow Jones industrial average was up by 5.8%, the dollar continued to gain versus the Euro and the Pound.

Although we can safely say risk appetite is higher,Â Â traders where still reluctant to sell the dollar.

EURUSD :Â opened the week with a bullish note, but yesterday lost most of the week’s gains by dropping back to 1.2630.Â I maintain a bullish view on this pair for the rest of the week, but only for as long as it trades mainly above the week’s open around1.2650. A clear break under, will most likely demolish the bullish momentum we have seen at the beginning of the week.

GBPUSD: the pressure on this pair is still to the downside today. However we can already spot some demand for the Pound every time it tries to cross under 1.37. The next support level for the pair is down at 1.3620, and thereafter 1.35. Expect the pair to continue and drop for as long as we are in a dollar controlled environment. Wait for the dollar to show clear weakness sings before longing the pound once again.

Z.Georgi