Asia Session Recap

Daily Forex Fundamentals | Written by Forex.com | Aug 08 08 04:29 GMT |

After holding a range for a full four months from April to July, the week has brought a definitive breakout in the US dollar. The week is closing with fireworks, a climactic surge in the value of the Greenback. The fall of the Euro versus the USD has been swift and ruthless, with the effects sweeping through the FX arena and taking no prisoners. The writing has been on the wall, first and foremost by the $30/barrel fall in dollar-denominated crude oil, and the event has finally occurred. Traders that have shown patience and discipline have finally been greatly rewarded.

Heading into the new day, eyes were fixed upon several key spot on the EURUSD chart, all to the downside. Level #1 sat at 1.5300, which was the low from June. Next rung down the ladder was found at 1.5280, the low of the 4-month range. Lastly, and perhaps most important on a longer-term view, is the 200-day Simple Moving Average. This is a widely followed technical proxy for the overall health of a financial instrument. Straight out of the gate, the entire market, except a stubborn USDJPY, has moved in lockstep with a robust US dollar. Simply put, the magnitude of the price movement has been otherworldly relative to the recent tight conditions. The charts tell the full tale - and should certainly be thoroughly examined as we enter a new territory - but the summary will shed some light. EURUSD closed New York trading at 1.5330 and fell 140 pips to a low south of 1.5200. GBPUSD has followed the same route, diving over 150 pips below 1.9300. Traders may not even recognize AUDUSD and NADUSD on their new big figures of 0.8900 and 0.6900 respectively. Predictably, both USDCHF and USDCAD continue their march to the topside, each tacking on healthy gains today.

In retrospect, we may look back to this week as an inflection point of sorts. Aside from the numerical data - including that of stagnant interest rates from the Fed, BoE, and ECB - and instead focus upon the ever-important change in bias from financial leaders, namely Fed Chairman Ben Bernanke and ECB President Jean-Claude Trichet. The tide has turned. US rates now paint a picture of stability while the Euro Zone is clearly at risk of future rate eases in the face of an inevitable acknowledgment of a slowing economy

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