Dollar Hits Fresh 15-Month Low

Overall, the dollar index fell to a new 15-month low on Wednesday, but the currency market bounced higher from this level as the equity and the commodity markets posted small gains in Wednesday trade. This is something that shows that the correlation between these three assets diminished in intraday trade. The U.S. calendar was empty of any significant reports, allowing the currency market to find a temporarily fair value for the major pairs.

Dollar Index technical view: TheLFB Member Charts

Daily chart trend: Short. Main price points: 74.00, and 75.00. Looking for: Wave C)

Prices on the dollar index have reversed over the past week around the black resistance line, influenced by a higher stock market. Currently the market is threatening the yearly lows, where a breakout will push prices lower. This is shown in the blue wave V) of an extended red wave V leg, of larger C), which may find the lows somewhere around the 74.00 area.

The euro (Eur/Usd 1.4970) tested the 1.5050 area throughout the morning session, but the move was completely retraced. Since the day started, the euro had a range of only 90 pips, with Wednesday being the third consecutive day in which the pair traded at a considerable distance from the average ATR of the last few weeks of trading.

The pound (Gbp/Usd 1.6550) is currently trading 550 pips below Wednesday's opening price, being the worst gainer of the day. The pound's selloff began in the middle of the European session, when the governor of the BoE, Mervyn King, said that a weak pound could help the U.K. economy. With this selloff, the pound is again trading below the 1.6600 area, which has been the main swing point area over the last six months of trading.