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Analysis Of Monday's Trading Session

Written by A Forex View From Afar on Monday, May 04, 2009

The currency market again saw a day of dollar selling on Monday, but the majors posted only modest gains against the Japanese yen, if any.” The main reason might be the closed Japanese trading session, which reduced significantly the liquidity of the Japanese yen in the foreign exchange market”, TheLFB-Forex.com Trade Team noted. Consequently, the Usd/Yen traded in a 25-pip channel during the overnight session, which eventually gave way as the yen plunged towards the support area formed by the 20 and the 200-day simple moving averages.

The Asian session saw the major pairs gain ground, but the London open reversed the trend and sent the pairs below the Sunday open price. The dollar was again sold shortly before the U.S. open, as the market expected the recent positive news to continue with today’s pending home sales and construction spending reports. The market expectations were overwhelmed when both releases printed better than the expected numbers.

Having the major pairs break above important price points of the last six months of trading it starting to look like the currency market is pricing in a gradual recovery of the global economy. However, both the dollar index and the financial markets will have a big test coming in the following periods, as three central banks are expected to announce interest rate decisions this week plus the results of the banks stress test.

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Fundies and Trading
There is a constant question from some traders as to why anybody would ever need to consider the ‘F’ word when trading. Fundamentals: what is so damaging at looking at both Technical charts and having a Fundamental filter to gauge how many Lots to put on? Why is it that accepting that Technicals give us price points to trade, but Fundamentals determine the direction that we travel is so difficult for some traders to accept? Without a Fundamental Filter very few pure Technical traders would have seen this Dollar move coming today.

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