A little too early, in our opinion. Something is wrong with the markets, Seasonally the Dollar performs weaker during the 4th Quarter, especially in December, with business repatriating funds, as well as sovereign funds of the BRIC countries - Brazil, Russia, India and China which play a big role here. But not that early as this Year. On the one side, there is inflation fear, rightly so, because of the mammoth fiscal and monetary expansion. And then, this inflation fear puts a lid on the Dollar, but the stock markets bubble with joy about the good economic outlook. Normally the stock markets hate inflation like the devil hates holy water, because it falsifies the P/E rate, a function of inflation, that is. The lower the inflation, the higher can go the P/E rate, and vice versa. Now is really something wrong in this funny year? There mustn't be, no. First, the stock markets may come to sense again, like that: The biggest companies in the Dow Jones Index represent only an eight of the American business. It is not all GM and big finance, In other countries it looks the same. So some soberness will surely return to the markets, removing some of the pressure on the Dollar. There is one remarkable case in history that would justify the present development. After the `48/49 recession last century there was inflation fear throughout the fifties and the sixties, but it never spiralled. Big infrastructure programs and real direct investment kept inflation under a lid. That came off eventually, in the late seventies, but that is another story. P/E's and stock markets soared, big money could be made with the Japanese stock market, GM for instance was paid with a P/E of 55, a high grade of confidence into inflation staying low (There was even talk of the so called nifty fifties, the best companies to own in the country) Could it be this time as well? Let us hope - it would be the best way out of a mess

Nevertheless, the trend for the Greenback now is down, and the trend is you friend. Look at the EUR/USD equation, its just consolidating on high levels, ready to start another attack. Accordingly we put our trading bands lower the Dollar in below`s major list. There are no fundamentally moving data scheduled for today.


Intraday Market Outlook for Day Traders

EUR/USD
The upward surge of the pair eased somewhat this European morning, but the market still consolidates on high levels, currently trading at 1.4540. As soon as the overbought situation is corrected and that could be soon, perhaps at a level of 1.4500,
we expect another up move leading to new highs.

GBP/USD
We expect some upward correction for the Pound, too, after its sound correction in early European trading. Currently trading at 1.6530, we expect prices today around the 1.6650 level.

USD/CHF
After reaching a low of 1.0340 the Dollar recovered somewhat in late Asian and early European trading hours. That could continue in low volatility, but we can't see any tradable upside potential. Trading right now at 1.0410, we rather see another test of the lows today.

USD/JPY
Even against the Yen, usually acting inverse to the other pairs, the Dollar is a weak performer. Now on recovery this European morning, it is currently trading at 90.75. Although we do not expect a quick recovery, there is some upward potential in the market today, perhaps to prices around 91.50.