Overnight the Dollar broke through key support/resistance levels against other major currencies. Given that these levels have been holding throughout the past month, and also given the confirmation across several currency pairs, we should expect further Dollar weakness going forward. The falling Dollar also signals an appetite for higher risk assets, including equities. Therefore we should also expect to see money continuing to flow into the stock market, at least in the short term.

This morning, the Euro moved to new highs against the Dollar, breaking a pattern that started developing in October. This would appear to be an excellent entry long EUR/USD.



The dollar also broke through important support against the Japanese Yen and Swiss Franc. These are fairly clean patterns, and the near-simultaneous break of support/resistance in the three currency pairs should give traders added confidence of a weak dollar in the near term. I am short USD/JPY and USD/CHF.




Forex traders should also be watching the GBP/JPY pair, especially given the Yen's strength against the Dollar and Euro overnight. As I write this, price is sitting just above key support.