This article is a supplemental information for the previous hub-page on : FX Price Signals as an Indicator. That clearly shows how the strong bias sentiments on the USD Index confirms the negative outlook. Comparing the rates from the previous price levels between the USDX of March and April of 2008 may provide some strategic ideas of where and at what levels the Foreign currency rates would be at, if and when prices breaks and continues its trend or otherwise.

Analyzing the USDX at the opening week of October 19, 2009 some expected recovery is being shown at the weakness of the USD/JPY rates as an indicator of unwillingness of the USD/JPY to decline to the levels of 87.11 which was registered in April of 2008 with the USDX at 71.40 from a low of 70.81 - 90 low in March 2008 the previous month.

The US Dollar may continue to rebound as an empty European economic calendar leaves currency markets looking to risk sentiment as the catalyst for price action. A handful of negative earnings reports in Asian hours added to last Friday’s disappointing US outcomes, which stands to boost demand for the safety-correlated currency.

The EURUSD breaks below the rising support trend line on 4-hour chart, suggesting lengthier consolidation of uptrend from 1.4484 is underway. Range trading between 1.4780 and 1.4966 is expected to follow, and a short term cycle bottom is expected to be formed above 1.4780 support. However, below 1.4780 will signal deeper decline to 1.4600 area. Key resistance is now at 1.4966, a break above this level will indicate that the uptrend from 1.4484 has resumed, then another rise towards 1.5100 could be seen. Although some corrective moves are expected the all time high of 1.6037 registered in the month of July 2009 is the ultimate objective if and when the 87.11 for the USD/JPY will be attained.

The USD/JPY is currently working at the price level of 90.66 as of this writing. some US dollar recovery can be seen as the more important support of 89.68 / 70 range can be tested as the lowest price registered in April of 2008 at the price level of 87.11 may still be assaulted if and when this support price will be broken. The Dollar has recovered part or previous losses against the Yen in the last hour. USD/JPY rebounded at 90.40 and rose to 90.75.

The pair trades at 90.66/70, 0.33% below today’s opening price. Dollar remains weak after being unable to break above 91.00. The Japanese Yen may have been one of the favorite carry trades for sometime but the US dollar since it's value and interest rates has been so low has become an alternative carry trade strategy that became popular as it depreciated for a long time now. And most cash capital flows have moved to the Australian Dollar which has a higher interest rate amongst the rest of the other Foreign exchange rates. And some AUD/JPY cross rate trades have also been favorable since then.

As the GBP/USD still lags behind the trend momentum of the Euro on strength. Although, the initial target of 1.6380 has been attained when the volumes and volatility to move forward remains to be bias then 1.6550 would be easily tested. As the all time high for the GBP/USD of 2.1160 was also achieved on Nov of 2007 when the USDX low price levels were at 74.11bp. In essence, the relationship of the US dollar is dictating the price alignment of the other foreign currencies, but as of now there needs to have some price re-alignment or adjustments as the disparity of the exchange rates should try to have an equilibrium level that may favor trade relationships with the major trade partners of the United States.

The GBP/USD retraced the overnight decline during the U.S. trade and advanced for the fifth day following the rise in market sentiment, and the pair may continue to retrace the decline from the previous month as traders move into higher yielding investments. The pair crossed back above the 100-Day SMA (1.6352) to reach an intraday high of 1.6398 after moving 86% of its average true range, and the pound-dollar may continue to trend higher over the week as the economic outlook for the U.K. improves.

However, as the Bank of England holds a different outlook for inflation and continues to see ongoing weakness in the banking system in the UK as some investors speculate that the central bank may expand its purchases of assets over the coming months. This is an effort jump-start the poor economy.

While the USD/CHF was at the price level of 0.9611 when the all time low for the USDX was also at 70.81 simultaneously when the US dollar recovered. The important psychological price of .9930 should really be looked at as this may soon be attempted as the USDX continue to head lower. Although, a day to day basis could be seen as part of the technical recovery for the US dollar for the time being.

Therefore, the expected FX rates would have to re-align with each other in sync with the US dollar's movement. Although, the real indicator to look into should be the corresponding volumes and open interest on the individual currency through the underlying financial futures of the Chicago Mercantile Exchange ( CME ) VOI weekly traders reports, that may provide a clearer picture of the outstanding / current long and short positions of the traders for an indepth market sentiment index.

Some due diligence can only improve trading results at this time especially when almost all traders, analyst, economist and even the news reports from the major financial TV such as Bloomberg, CNN, MSNBC, BBC have been negative on the US Dollar compared to other Foreign currencies. Watch for some surprising reports that may trigger a short term corrective movement on a day to day basis for the US Dollar against the other FX rates.

Good Luck and Happy Trading ! Pls. Choose Wisely !