The Impact on Currencies from the Commodities that Move Them

Forex traders cannot analyze the pairs in bubble. There are three key commodity futures contracts that must be followed each day - if not every trade.

The first of these is the U.S. Dollar Index futures. The U.S. Dollar is bouncing from the 77.65 low set on October 1st. This bounce has been over-analsyzed as some sign of life from the U.S. Dollar but do not be fooled. The Dollar has a long way to go to show that 1) It can attract buyers above 79.00 and 80.00 and 2) That these breaks above 79 and 80 won't simply be shorting opportunites - which is exactly what they currently are.

Fibonacci resistance is currently waiting at 78.77 which is just three ticks shy of the 78.80 minor psychological level. Beyon that, 79.00 looms like a huge hurdle that the Dollar will need some good data to overcome. Stage right: Enter the NFP this Friday. Friday will be the day that we will see whether this move north in the Dollar can stay above 78.00.

The crude oil market is another currency mover and while the pullback here has been almost four dollars recently, there are buyers at and above 80.00 as the market sits at 80.37 intraday. The market overall is still in a significant uptrend and there is a singnicant different between a correction and a reversal. This market has more to fall to call it the latter.

Finally gold -- which has been on everybody's must buy list it seems -- has pulled back to give the bulls an opportunity as buying into a correction. There is support at the 727 level as well as at the 722 level.

Raghee Horner is a private forex, futures, and stock trader based in South Florida. She is the author of two best-selling forex trading books and founder of EZ2Trade Software. All charts we used with permission from eSignal and EZ2Trade Software. For a more information about Raghee's automated software, visit www.ez2tradesoftware.com.