Sharp US dollar fall

As I wrote yesterday, it is far more important to pay attention to what key financial people (like Ben Bernanke or Mr. Draghi) say during press conferences than what they present on paper. Yesterday was a clear example of that. When FED meeting minutes from June were released nothing really happened. US dollar went down slightly, but recovered in fifteen minute time. However, very strong pressure for the US dollar came when the FED chief Ben Bernanke started delivering a speech at a press conference. That’s when dollar plummeted. In some pairs it lost over three hundred pips in less than twenty four hours. 

This suggests that the downtrend in the greenback may continue till the end of the week. For the time being Euro remains one of the strongest pairs and should be bought on tips till other important Forex news data is released that could revert its’ trend. The Bank of Japan governor Kuroda also slightly surprised the markets by saying that the Central Bank of Japan may not increase its’ stimulus. It indicates that Japanese Yen may finish its’ downtrend and start going up very soon. Although fundamental data from Europe is not very encouraging, Euro still has potential to go beyond its’ recent highs of 1.3400.

US dollar bearish after FED

Market participant expected to see more bullish FED minutes today, but Federal Reserve committee published slightly more dovish report that most traders expected. As a result US dollar fell, together with major stock indexes. On the other hand, the minutes are quite positive about the path US economy is taking with a slight concern about employment situation. If that improves the stimulation process would end sooner rather than later. Most speculators expected more hawkish statement though. 

Anyway, there is one more risk event lying ahead of us today and that is Ben Bernanke’s press conference coming in less than one hour. This can turn things around and US dollar may rebound or continue falling even faster than after minutes. Oil as you may see is rising. It has broken key resistance levels and is probably headed to all time high at 150 dollar per barrel. Gold seems to have formed double top on hourly charts. This is not a very serious indicator since it is on hourly charts, but I still see it as a possible sign of a reversal and going down to 1180 low that was reached at the end of June. I am also bearish towards S&P500 and other stock indexes.