The equity markets, gold, and oil rallied today and the dollar traded relatively flat. This small bullish move in the equities may be an indication of lack of conviction in stock market currently. If equities fall, we will expect to see the dollar strengthen as a safe haven for a falling stock market. This is particularly intriguing as the dollar (DX) is sitting at a one month resistance and a 1 year 38% Fibonacci retracement level.

The EUR/USD dropped through support. This appears to be driven more by euro weakness rather than dollar strength today. If the dollar is able to break through resistance, this pair could see weakness to the next Fib projection level at 1.3250.(see EUR/USD below)

The GBP/USD appears to have created and confirmed a bear flag pattern. The bear flag pattern could see weakness in the pair to 1.5400 (down 800 pips). In conjunction with the bear flag pattern, the Fibonacci retracement levels are pointing to 1.5285 as the next support level for the pair. .(below).

The AUDJPY is still stuck in between the 38% and 61% Fibonacci levels. We expect a break out above resistance to retest the recent high and a break below support to retest the recent low. In the interim, the pair does not have a strong directional bias.(below).

The USD/CAD traded in a 100 pip range today without providing a strong directional bias. The move today may be validating 1.0450 as a strong support. A move above 1.05 could see the pair retest 1.07 while a close below 1.0450 could see the pair drop to 1.0250 or lower.

Blake Young is Senior Currency Strategist for ShadowTrader.net.

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