U.S. Dollar Rally Currently Battling Stiff Resistance

By Eric Parnell:The U.S. Dollar has been rallying sharply since the beginning of September. Although the secular downside pressures on the U.S. Dollar are well known, a variety of fundamental factors support a continued rise in the greenback at least in the near-term.

LAST year, the euro was just about the worst-performing of the thirty-odd “major” currencies tracked by Bloomberg. That seems fitting: the sovereign-debt crisis at the euro zone’s edges was the biggest macroeconomic nasty in 2010. The wonder is that the euro did not fall harder. It lost “only” 6.6% of its value against the dollar, not a huge sell-off for a currency whose very existence seemed under threat. Even now, after an early-year rally in the dollar, the euro stands at $1.31 or so. That is comfortably above the $1.15-1.20 range that is widely considered as fair-value.

Cliff Wachtel submits: While the Euro’s jump on Friday was mostly due to profit taking as a result of its oversold short term status as markets sold the USD, because they realized there was no meaningful increase in US rates, the question arises: is the Euro due for a serious rally soon? We don't think so, here’s why:

The Lebanese-American poet Kahlil Gibran observed that sometime a mountain is clearer to a climber from the plain rather than the summit.  In this spirit, we take a step back this week.   Given the sizable moves in the foreign exchange market, we thought it might be useful to look at the long-term technical picture of the major currencies.  Rather than provide analysis using the daily bar charts, we look at the weekly and monthly charts.  

The latest from Winston Wolfe. – JS The rumors last week that Greece was fed up with the austerity program forced on it by Germany and the other eurozone countries caused a sharp, terrifying selloff in the EURUSD.

This post is a guest contribution by Dian Chu, market analyst, trader and author of the Economic Forecasts and Opinions blog.For the most part of 2010, the typical image of Europe—one of cultural sophistication—has been replaced by widespread riots, burning cars, large scale strikes over labor reform and unemployment resulting from austerity measures amid a sovereign debt crisis in the region.

Bret Jensen submits:Tuesday’s market provided one of the biggest rallies of the year so far, albeit on the low volume we have become accustomed to on up days over the last few months. All major indexes ended up over two percent. The rally was very interesting as the bad news seemed so much heavier than the good news Tuesday. I chalk this up to this being a quadruple witching week with the calendar providing some temporary tailwinds to equities.