As I mentioned yesterday history will judge whether this week's action by the FED was prudent or foolish but what cannot be denied is the effect on the US which is free fall and looking to move towards the 96 price point. This makes today's non farm payroll release even more important as a strong number should give the USD some support. The weekly chart for the DXY shows the extent of this week's move as well as the downside levels ahead.
And it's the nzd/usd which has been the strongest of the majors this morning as we can see on the charts below.
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It's been a day of weakness for the Aussie yen as risk-on sentiment evaporated once more, with markets remaining fragile and nervous as each day reveals fresh news on the current virus sweeping the globe. As a barometer of risk the AUD/JPY is always one currency pair that reveals this sentiment clearly, with the Aussie dollar considered a risk currency and the Japanese yen a safe haven. This weakness was signaled earlier in the week with the failed effort to rise on high volume and now followed by a bearish engulfing candle.
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The crossover sessions in forex occur when trading in one timezone closes and another opens and can be a very dangerous time for traders. Why? Because this is where insider traps are set. The London open always is a fertile ground and there was a great example on the usd/jpy.
Heavy buying in the pair on the previous day resulted in a nice move higher in Asia with the pair moving into consolidation ahead of the London open.
Prior to the open the pair started to move higher on reasonable volume but reversed lower at the open on high volume until the hammer candle, again on high volume pushed the pair back towards the consolidation (the yellow line on the chart).
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