Currencies Hit by Risk Aversion

NEW YORK (TheStreet) -- The dollar index strengthened across the board in Thursday trading, as the market traded in a classic risk-aversion phase that mirrored a drop in global equities.

The major pairs headed lower from the start of the Asian session and continued to so during the next few hours of trading. The selloff on the major currencies against the U.S. dollar was driven by Japanese equity and commodity market trade, which posted substantial declines, and which impacted the European open sentiment. In the current economic climate of questionable global growth, risk aversion means lower stocks, higher bonds, and stronger dollar as Treasury notes are bought.

Dollar Index Technical View: TheLFB Member Charts

Four-hour Chart: Mixed. Main price points: 74.70 and 75.77. Looking for: Wave V) bottom

Dollar index prices are still trapped between the 75.77 resistance and 74.70 support regions, which means that traders should wait a breakout of either before getting a near-term trend read.

A break of the lower support line and 74.70 bottom will put the 74.00 - 74.30 target in play.

On the other side, traders will look for bullish U.S. dollar opportunities if the market trades above the 75.77 zone.

The euro (Eur/Usd 1.4860) dropped just over 100 pips since trade began with most of the declines coming during the early European and Asian sessions. Following this selloff, the euro is testing again the 20-day moving average. A break below this level will probably send the pair much lower.

•  
• Loading Comments...
•