USD Technical Forex Analysis for Forex Traders

Fears of continuing global slow-down of the major world economies continues to benefit the USD this morning as flight-to-quality buying and deleveraging liquidation drive the majors lower. Most pairs are at new 2008 lows to start New York with USD/JPY holding firmer near the 93.50 area after an attempt at lows was stopped cold in Asia.

Despite weaker stock markets around the world overnight traders continue to pile into USD as investors continue to boycott the buy side of almost everything. Commodities were lower with Crude specifically edging toward $59/BBL after OPEC cut production on Friday; most traders note that if Oil should fall farther than around $55 the bull market would be over and the pressure on global recession would dramatically change.

In my view, the continued panic in world markets is reaching the oversold mark as the deleveraging must be nearing its end. Forced liquidation of assets only takes a week or so to work through the system and volumes are dropping off on this dips. The Greenback may finally be nearing the end of its unexpected bull run. Overnight G7 comments say the excessive moves in the Yen are undesirable and the G7 hints at intervention.

Although intervention is unlikely, a coordinated rate cut led by the Fed this week is certainly on the table. Depending on how the market is priced prior to the news if the Fed cuts rates by 75 BP the USD could drop as traders re-price risk. For the record, overnight the GBP fell as stocks dropped to a low print at 1.5275; pressure is still on from Friday's UK GDP numbers.