Likelihood of Short-covering Rally in Greenback Increases
The likelihood of a short covering rally increased today from a technical perspective with the beaten down Greenback jumping 50 pips, after again finding support at the approx 75.00 level. Given the currency market’s penchant for counter-trending moves ahead of the weekend, we might be looking at still further upside going into Friday’s session.
Hedging pressure is also very likely contributing to recent U.S. Dollar strength as companies around the world, having learned their lessons in 2008, are hedging up holdings at levels thought unobtainable just 6 months earlier.
The Daily chart below shows a double bottom over the past month with pronounced positve divergence between price and the momentum indicators.
Jay Norris
www.trading-u.com
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