On the eve of European stress-test results on the E.U. banking sector, traders bid the German Dax higher and have created a risk-on European trading session.

U.K. and eurozone macro-economic releases posted better-than-expected results overnight and added to the thought process that the euro and pound may have bottomed out against the USD.

With a huge amount of red-flag economic releases to come from Canada and the U.S., including testimony from Mr. Bernanke, the head of the Federal Reserve, the forex markets may become volatile.

Overall trend and momentum reads on the 4-hour charts are still favoring short-USD positions, but the momentum flows are still weak. A solid session of equity trade holding support, and the S & P 500 closing out the week above 1075 will create a solid base for the major currencies to hold against the USD.

The main swing points on Thursday are: EUR/USD 1.2850. GBP/USD 1.5250. AUD/USD 0.8800. USD/CAD 1.0450. USD/CHF 1.0400. USD/JPY 86.50. If the major pairs can hold these price points against the USD going into Friday trade, the next leg lower on the dollar index will be in play.

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