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Dollar on Break From Recent Behavior

The US dollar took a break from gaining against other currencies. Also the risk factor took a break: US dollar fell when bad American data was published. Also the USD/JPY – Stock market correlation took a break. Let’s see what happened yesterday (Feb 19).

The US dollar took a break from the upward trend after 7 days of strength against the Euro. Speculations of German intervention to help Eastern European countries to avoid a default on bonds was in the background.

The risk factor also took a break yesterday. Bad economic figures weakened the dollar, like in normal days. The  Philly Fed Manufacturing Index  is one example.

A look at Japan

In Japan, the BOJ not only left the interest rate unchanged, but also lowered expectations for the rest of the year. It is the worst recession in 35 years in Japan.  

USD/JPY and stock market correlation is now weak – The rise in USD/JPY happened despite a fall in US stock markets. Taking a look at trade in options, a rise to 95 is very possible. This is expected despite the USD/JPY reaching a strong resistance line.

But there’s one correlation that stands firm in this regard: when the US dollar weakens against European currencies, the Yen weakens even more. This is exacly what happened yesterday.

Today, the British pound raised it’s head. A review of today will be published soon.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.