Greek Austerity, Dollar Slides

By Colin Twiggs
March 3rd, 2010 10:00 p.m. ET (2:00 p:m AET)

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The US Dollar Index is retracing to test the rising trendline at 79.5. Twiggs Momentum (21-day) is slowing and a trendline break would confirm that the primary up-trend has weakened.

Gold

Gold broke through resistance at $1125 to confirm the end of the correction. Twiggs Momentum (21-day) recovery above 2% suggests another primary advance. In the short term, expect a test of resistance at $1160; breakout would confirm the advance. Reversal below $1060 is unlikely, but would signal a primary down-trend.

Crude Oil

Crude is headed for a test of resistance at $82. A partial swing or breakout from the large broadening wedge consolidation would indicate future direction. Momentum is above the falling trendline and a large trough that respects zero would suggest a new primary advance. Reversal below $70 is unlikely, but would signal a primary down-trend.

Euro

The euro recovered above $1.36 on the back of a new austerity plan announced by Greek prime minister George Papandreou (WSJ). Breakout above the declining trendline would warn that the primary down-trend is slowing — as would a higher (large) trough on Twiggs Momentum. Reversal below short-term support at $1.345 is unlikely at present, but would signal a new primary decline.

Japanese Yen

The greenback is also weakening against the yen, having broken support at ¥ 89. Expect a strong correction to test support at ¥ 85. Failure would signal a primary down-trend with initial target of ¥77, but the BOJ is likely to intervene to protect Japanese exporters.

* Target calculation: 85 + ( 93 - 85 ) = 77

Australian Dollar

The Aussie dollar broke through resistance at $0.90, indicating a test of $0.93. Reversal below $0.88 is unlikely, but would test primary support at $0.86. Twiggs Momentum Oscillator (21-day) recovery above the declining trendline is a bullish sign; a large trough above zero would signal a primary advance.

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