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USD - How can it hold?





USD seems have bottomed out for short term. It gained some ground against Euro and Yen. Perhaps more precisely, the fall has taken a breather from the all time lows.

One of the most spectacular aspect of this fall is the near universal decline against all currencies. Such, a weakness though expected and predicted, shows sheer amount of dynamism that will effect the markets once the "ranges"/"notions" of decades give way to new world of equilibrium. This fall, and more importantly the lack of strength of dollar to recover bodes evil for dollar bulls, for at least good part of the year to come. The present pullback, if it can even be termed that should be viewed as temporary.

Given the weakness exhibited USD may breach the lows repeatedly, show some massive positive divergences, and yet be unable to stand up against the force of the downdraft.

For the short-term, the USD CHF is in a dicey situation, and well worth a watch. The patterns and the divergences are very positive of the USD. But, can USD hold or more importantly for how long it can hold. Given, the situation and general direction it seems headed, USD may well crack the bottoms (may be after some tries).

The real pointer for the USD direction (which forms the basis of CHF call) however is given by Yen. Yen has successful resisted at 61.8% retracement around 119. The lack of momentum, the growing weakness of dollar, the possible end of the corrective up-wave all seem to be giving a big downside for the USD. Below the pivot of 118.25, the obvious target would be in the 117 ranges. To stick some neck out, the dollar could be 115.30. We would turn cautious on this call if the USD were to sustain above 119. But the drift down remains a good possibility as long as it stay below the 119.90 level.

Let us contradict. In the present scenario and the wave structure, there is high possibility of massive Yen option strike barrier at 120. This for one means the try for 119.90-120 is a possibility and also it wont be a easy break.

:) Falkor
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