Dollar Gives Up Most of Its Gains

NEW YORK (TheStreet) -- The dollar index overall strengthened throughout the Asian session Tuesday but as the market headed towards the European open the dollar gave up most of its gains.

The pair most affected by the selling was the pound, which plunged 150 pips from the Asian session open. The currency market now is close to the high of the current year, just waiting for a trigger to push the price action one way or the other.

Dollar Index Technical View: TheLFB Member Charts.

Four-hour Chart: Short. Main price points: 74.95 and 76.82. Looking for: Wave iii

The dollar index is trading around the 75.00 area and with higher commodity and stock prices the break into new yearly lows may easily appear. As such, we are looking for a bearish mid-term wave count where the previous a, b, c (zigzag) count became the primary view.

Currently, the market is trading in a blue wave V) leg (see the chart) , which is an impulsive leg, and a five wave move lower is expected so long as the market trades below the 76.82 zone. It seems that the black wave iii is underway which should break the 74.95 lows in the near-term for a move towards the 74.00 target zone.

The euro (Eur/Usd 1.45005) spent an important part of the overnight session consolidating in the 1.4970 area. From there, it started heading higher during the European open, pulling with it the other major pairs. Right now, the euro is trading above all of the important moving averages, and just 50 pips away from the high of the current year.

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