The dollar weakened/consolidated in the US session after the International Monetary Fund noted that “worsening” credit conditions may prolong the economic slowdown. So financials sold off again, taking everything else with it but it did not affect that dollar in such a bad way as what we are accustomed to, especially against the EUR.

So what is going on ? Is the Bucky still going to strengthen?

Think about it this way:

The credit crunch accompanied by the housing slump IS NOT LIMITED TO THE US ONLY. When the slump in the US is recognized as “less bad” than all other countries then we might change our skeptical view of the Greenback. I think that day is coming. Think about it for a while. Maybe the Fed really had a thought-out plan for recovery way before everyone else, anyone else..

Here is a 1-year chart of the Dollar Index and we can see the Bear trend for the last 12 months has been violated. The only issue I have with this scenario is that the Dollar Index is consolidating after the violation instead of defining higher peaks and troughs

If you have a comment or different opinion, please feel free to reply to this post

That said,  here is your Probability Studies for today:

EUR/USD – Bullish Trading Condition. The bullish 60minute trend is still intact although price is still around the 1.5750 level. We can also see moderate divergence – price consolidated while the Stochastic is bullish – but it does not change the direction of highest probability. Should the bullish 60minute trend be violated the bullish trading condition/probability would be no more

GBP/USD – No Trade Zone within a Bullish Probability. Price violated the intermediate bearish 60minute trend to the upside and that particular violation is now in the process of being confirmed (support at previous violated resistance) Should the 1 hour indicators confirm their bullish crosses, we will have a trading condition all the way up to the first bearish 60minute trend resistance at 1.9990/2.0000

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