Durable Goods Orders Turn The Majors Around

[ForexChaser.com] A noticeable drop in the Durable Goods Orders numbers for the month of June was enough for the Usd to regain its crown in the currency market. The Japanese franc and the Swiss franc were the only two currencies that managed to gain ground against the U.S. dollar, while the others majors moved lower without too much fighting.

Just a few months back, the economic recovery seemed pretty strong in the U.S., while in other parts of the world it looked very pale. Fast forwarding to this day, important parts of the market start to consider that the recovery was overvalued and that the U.S. economy is not doing that good. Claims for a double dip recession are starting to spread among financial analysts, something that has negative implications for the equity market but at the same time strengthens the U.S. dollar due to its status as a reserve currency.

The price action of the Eur/Usd in the 1.3000 area appears to be increasingly bearish. The pair had already 5 different attempts to push above this resistance area over the last two weeks of trading, but until now it has failed to move anywhere noticeable. Forexchaser.com team expects the Euro to enter in a downward move over the next few days, with an initial target set in the 1.2750 area.

The price action of the Usd/Cad was also interesting. The last few months of trading gave the pair the opportunity to develop a symmetrical triangle formation. In normal times, this is seen as a continuation pattern, however, considering that the Usd/Cad has not really moved anywhere over the course of the last 9 months of trading, we expect that the pair will continue to trade in a very wide range over the course of the next few months. This could be exploited in the options market by using strategies that assure a short exposure to volatility, such as Vanilla Calls and Puts (Short) or the more complex Butterflies and Condors plays (Long). In the short-term, ForexChaser.com team expects the Usd/Cad to continue swinging around the 200-day SMA, in the 1.0400 area.

Thursday’s calendar is almost clear of releases that could surprise the market, therefore the Dollar Index is expected to continue its uptrend towards the 82.50 area.