Crown Forex

Correction Across...OR???
The dollar comeback was again based on major's correction rather than change of investors' rhetoric, profit taking and position alteration is seen ahead of the long weekend as traders what to take the chance from the short-term downside wave to initiate a stronger upheaval from the bottom providing more momentum to majors to reclaim their records.

Europe's united currency, the euro, is heading for its fourth day of losses against the dollar, marking the first come back for the dollar on a weekly basis after five consecutive weeks of massive losses. If we take Fibonacci Retracement for the weekly wave from the bottom at 1.4440 till the this week's top at 1.5902 we find that the euro is heading to the solid support barrier where good demand is palace which is resembled by 38.2% level at 1.5346.

Today the Euro managed to decline from the opening levels high at 1.5640, and after breaching the minor support at 1.5580s it extended the downside to breach the first Retracement level of 2.36% at 1.5557, the early German good data and followed by Euro Zone PMI services and manufacturing flash PMI which came almost inline with expectations did not halt the key reversal pattern the euro has formed; euro area fundamentals are still sound and for that despite the short-term correctional wave the 15 nation currency remain to have a much higher edge against the dollar. The intraday low was set at 1.5436, while still remaining above the 20 Days MA at 1.5410s is still holding the pair, yet if breached the euro will continue the wave to the mentioned 38.2% level.

Sterling has lost its upside momentum against the dollar since yesterday's incoming fundamentals from UK; adding to the MPC split and the actions taken by the bank to auction liquidity to ease tightened markets, rumors have had their toll much more empowering further expectations of a sooner than expected rate cut to be next meeting rather than May. The BoE had to dismiss gossip once more concerning a leading UK bank that was tabbing emergency funding aster deteriorating liquidity, the FSA are investigating the issue as they see that speculators are heading to indulge in such gossip in the market for their own benefit and that was the main driver for Bear Stearns fallout as it led to huge withdrawals that crunched their financial status, and ended in the hands of JPMorgan.

The pound weakened against the dollar breach the $2 barrier, and after yesterday it managed to beach the major support level at 1.9878 and with closing below the level the downside wave was extended as today's low as set at 1.9735 where it still managing to contain the pair as the area among 1.9750s-1.9730s provides good demand on the pair. Yet with both outlooks for the pound and the dollar being week the pair lacks driving momentum and remains the solid change in stance that might help the pair breach the restrictive area its now trading within among 1.9880s-1.9730s and despite today's stronger than expected retail sales sterling did not convict investors to alter their sentiment, and for that any key defining pattern for the pair will be adjusted in next week's opening as traders comeback clear headed after a long weekend.

Risk aversion, remains the key driver to the Japanese currency, as the dollar's weakness is also adding to downside pressures on the medium to long-term trend; the Japanese economy has yet to reflect their effect form market turmoil and the US economic slowdown which is a major trading partner of theirs and they might clearly their exports as Japan accounts much on that sector, especially adding to their sorrow is the yen's massive appreciation in a recent period of time.

Today the pair is trading among marginal level which if breach will confirm the upcoming wave as the low volume of trade is confining the pair among 100.50s-98.60s, the pair was seen upside bias since the European session recording the high at 100.20 while failing to pursue the upside the pair now trades near 99.50s and again a successful breach to the mentioned range needs to be seen to set the upcoming trend either extended the upside reversal or initiating a new downside wave which will take the dollar again to it almost 13-year lows at 95.00 levels with high volume...