By: Bastian Rubben
Wall Street closed the best trading week in weeks and the indices are on the way to take over the 2012's picks. The three main indices created bullish reversal pattern during last week, as the most important one, the S&P 500, managed to close above 1400 points and it is just 20 points below the annual high. Most of the large companies reported better than expected results, which pushed the index higher, and they are the reason for the recent rally. However, the results season is not finished and some disappointing reports might bring the negative momentum again.
This rally in the US stock markets had a strong impact on the USD and it blocked the currency's plans for making a significant strengthening against the major currencies. I have been mentioned several times here that the US indices has a negative correlation with the USD and therefore it was clear to forecast the change in the USD's momentum when the stocks started rising.
The American dollar is weakening against the Euro, which has been rising in uptrend channel since it reached the strong support at 1.30. The pair EUR/USD is touching the upper boundary of this channel, which means that it might slide to the lower boundary from this point, as stochastic indicates for overbuying situation. On the other hand, the Euro might continue strengthening and a break-up of the higher boundary might take it up to 1.34.
