Over the past few months the dollar has been on steady rise against most major currency pairs. With the debt crises emerging again with Ireland accepting bailout funds from the ECB and with the continued concern of the debt crises spreading to other European countries such as Portugal and Spain many investors have been flocking to the dollar and gold as a safe haven. The 10-year bond spreads of Portugal and Spain against the German bond are near their highest levels since the Euro inception. With the increased yield investors are demanding to hold Portugal and Spain debt against German bonds signals the lack of confidence the EU will be able to contain the debt crises.
The dollar has also been rising constantly against the yen over the past four weeks. As military tensions between North and South Korea escalated this past week putting increased pressure in the regions.
As we can see from the daily SPY of the past week price action has been trading sideways between the 20 and 50sma with the 20 sma as the resistance level. From my perspective trading will be very limited until we are able to pick a direction above or below the simple moving averages to expect some follow through or trade ideas.
