The US Dollar pulled back as global stock and oil prices recovered but the bearish technical setups created with yesterday’s selloff have not been invalidated, hinting the greenback remains poised to advance amid renewed risk aversion.

Student’s Question:Here's the support line. But I am still confused as to when should I enter the trade and when should I exit the trade according to the historic chart I posted?

The euro is weak across the board. In fact, the EURAUD is trading at a 19 year low and an objective is 1300 pips lower.

U.S. stocks posted their largest gain in nearly two months despite a report that the number of mortgage applications declined for the first time in six weeks.

Once again, we are left to qualify the sincerity of investor sentiment. Wednesday’s session brought a clear advance in the appetite for risk; but considering the lack of a distinct trend for equities, crude and even progress on gold, it seems traders are still waiting.

Intensely choppy forex market price action has made short-term US Dollar forecasts especially difficult, but evidence of sentiment extremes in the Japanese Yen suggests that the USDJPY may soon reverse. Forex futures positioning data shows that Non-commercial traders are near the most net-long the Japanese Yen (short USDJPY) since the USDJPY bottomed in late 2009.

The Bank of England is widely expected to maintain its current policy in September, and the British Pound could face increased volatility following the rate decision as investors weigh the prospects for future policy.

The AUD/CAD is looking to test trend line support following a 25 bps rate hike from the BoC, despite the central bank’s slightly lower outlook for growth.

Potential exists for a USDJPY reversal and strength up towards 8800-9000 before the longer term downtrend resumes.

The EURUSD decline from 13340 may be unfolding as a series of 3 wave declines (double zigzag). The next opportunity will be from the short side against 12920. 12470 and 12200 are targets. 12780 and 12820 are resistance areas.

The Canadian dollar pared the overnight decline and is the best performing currency against the greenback on Wednesday, while the Japanese Yen weakened across the board following the rebound in risk sentiment.