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Dollar readying for Breakout



The charts of Eur and Yen seem to be signalling a divergent tone. Being in the crux of new ranges it is hard to say which one will finally win - Dollar or others.

Euro on hourly and 4-hourlies is showing some good divergences in momentum. This is for great part because of it being at the all time highs.

Yen seem to be holding the 120 levels as I write. The way I look at yen is either a break above 120 indicating dollar strength or a crack for dollar.

But I would like to consider one middle ground in this case. That, the strength in Euro may not necessarily result in the strength of Yen against Dollar.

Some of the fundamentals affecting the markets right now, it the possibility of the Fed keeping the rates constant. That is as good as dipping rates, as no body expects the rates to dip so early in the cycle. Stopping of hikes is itself a victory. Even, if the hikes come, and other major banks (japan) keep their rates steady, the USD will benefit.

The M3 growth of Euro is 10.5% mom. That means, the inflation fears would still be prevalent, may be leading the rate hikes. The futures market seem to be discounting at least one rate hike.

Japan seem to be going steady with the rates, as they have not raised the rates yet again. The reports of the slowing growth would also put pressure on further rate hikes. Yen in other words could be heading down for now, irrespective how the dollar plays out against other currencies.

Breakout should happen in short while, and the picture (technically) much clearer.
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