High Price Volatility for Dollar amid Light Trading
Posted on 30. Dec, 2008 by admin in USD Analysis, USD Economic Analysis, USD News
As expected, there was very light volume in trading yesterday but high price volatility for the EUR/USD. The pair climbed as high as the 1.4360 mark. After the 1.4000 support line was broken, a corresponding rally in Crude Oil prices was seen due to a weaker Dollar. The pair ended the day down at 1.4043.
The pullback of the EUR during the financial crisis has been largely eroded as the year end approaches, leaving the Dollar range trading between 1.3900 and 1.4200. This type of trading may be seen throughout the remainder of the year as currency markets see high price swings due to illiquid market conditions. This could leave traders with some potentially profitable trading opportunities for the next two days. As to what direction the Dollar may go for the coming year, the question needed to be asked is, are we finished with the big deleveraging that we’ve seen from the financial crisis? We may see some deleveraging that could strengthen the Dollar in the short term, but some fiscal and monetary policies choices by the U.S. government may lead to a weaker Dollar in 2009.
Today traders will be looking for the consumer confidence index to be released. The survey is forecasted to show a small increase in U.S. household confidence. Market conditions may again create high price volatility in the EUR/USD and other Dollar crosses.
