Forex Traders Looking For A Major Swing Point

Global risk markets seem to have found support after three sessions of selling that wiped out 2010 gains in most equity markets. In reaction, forex pairs have stemmed the Usd dominance, for now, as the overbought dollar index finally has time to test support after a breathless run higher in recent trade.

S/P futures, which really are the best gauge of global risk tolerance at any given time of day, have settled around 1165, after reaching down to test the 1150 area and in doing so tested the 2010 break-even point. If a long move towards 1175 and maybe 1180 can happen, the major currencies will find it easier to regain the ground lost to the dollar this week.

A move lower on S/P trade will signal a lot more Usd strength is to come. Forex traders have a major swing point unfolding ahead of a massive set of red-flag economic data to come on Thursday and Friday. The Bank of England and ECB rate decisions will dominate, with focus on the 08:30 ET ECB Press Conference likely to create mass volatility in the Eur/Usd arena.
The long side of Gbp and Aud look viable, as does the short side of Jpy and Usd/Cad, however Eur and Chf look to be stuck in reverse gear at the moment. The momentum and volatility will build ahead of the Friday Non-farm Payroll numbers from the U.S., which look to be ready to print positive for a second month.

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