What a week it has been

What a week it has been in the FX markets. The greenback's massive selling off had been exacerbated by the possibility of further quantitative easing steps and asset purchases by the Fed, as revealed in their Apr meeting minutes.

Just this week, the dollar lost 4.97%, 3.72% and 4.49% against the Sterling Pound, Euro and Aussie.

And myself, I lost some money on the GBPUSD recommendation I posted last week as well (a loss of 120 pips). But, the murder had been a quick one as the price of the GBPUSD blitzed past my stop order so quick I couldn't react.

Yes the meeting minutes played a role in the dumping of the safe haven dollar, but I believe this is a part of a sea change towards valuation of currencies. This week's moves are a confirmation that the worst of the global recession is over as prices are trying to find their way back to normalcy.

Of course, we will not see EURUSD, GBPUSD and AUDUSD trading back at the heights of 1.62, 2.00 and 0.95 like in the heady days of '08 any time soon, but the markets are making adjustments already. Even ahead of the stock markets.

This week, the Dow traded almost unchanged, but currencies moved like crazy. Going into the next couple of weeks, I trust there would be potential for a correction back down but I am not making any confident calls right now as I have not found objective support/resistance targets after the strong bursts higher.

For the above major currency pairs, I suggest trading using the day's main theme and riding on the day's trend will help prevent excessive losses as compared to leaving positions open multi-day.

But if the corrections are strong, I'd favour buying these majors against the dollar for a longer term trade.