Beware Thanksgiving Volatility

Daily Forex Fundamentals | Written by Investica | Nov 23 09 11:51 GMT |

Over the past two years, there has been an increase in volatility during the US Thanksgiving week when trading activity is significantly lower. There is also the beginning of institutional year-end pressures which makes funds much more cautious over holding positions. In this environment, it can be much easier for short-term players to break technical levels, create momentum and trigger stop-loss activity. It is likely that key central banks will be very mindful of this and will be looking to avoid instability. To keep the correction prospects alive, it will be critical for the dollar to hold support in the 1.5050 area against the Euro this week. The Euro dipped to test key support near the 1.48 level on Friday, but found support close to this level and rallied back to around 1.4850 later in the US session. Over the past few years, there has tended to be volatile trading during the Thanksgiving week and there will be speculation over large currency moves this week. The dollar weakened again on Monday, undermined from comments by regional Fed Governor Bullard who stated that the Fed’s bond-buying programme should be extended beyond the current period to give greater policy flexibility. The Euro rose to near 1.4950 with gold prices also higher. The latest Euro-zone PMI readings were firm, although the manufacturing index was slightly below expectations. There will be further concerns over the Euro-zone structural outlook. Investica http://www.investica.co.uk Disclaimer: Investica's market analysis is not investment advice and must not be taken as recommending particular market positions. Investica can take no responsibility for any actions taken by investors.