Spot gold is trading at $1315 an ounce as this being written and is on its way to a target which was mentioned in this column in October 2009 of around $1340. Meanwhile the US dollar index is at its lowest level in eight months.

I believe that the end of quarter window dressing to try and break above $1150 on the S&P 500 is causing some extremely over-stretched conditions in the FX market which is all part of the effort to provide the most supportive backdrop to further gains for equities.

Somewhat tongue in cheek I made the following comments earlier this morning from my twitter account:

My hunch is that $GBPUSD has a run at $1.60, $EURUSD at $1.38, $AUDUSD at 0.98 and then it's wile coyote time - which would also not be good for $SPX.

FX market seems really stretched against the dollar and there could be a big snap back in coming days.

End of quarter window dressing is causing some real tensions in FX which seem ready to break apart - perhaps even later today.

The achievement of the $1340 target on gold, which arose in connection with the inverted head and shoulders pattern that took a couple of years to develop, could mark an exhaustion point in the outright hatred of the US dollar at present. October could be interesting.



A potential double top lies in wait for $GBPUSD.



As discussed here on Tuesday and on CNBC that afternoon, $AUDUSD could be facing a key inflection point.



The S&P 500 futures are currently at 1140 and if the window dressing exercise can be sustained today it would be not be surprising to see a rally up to 1150.

Meanwhile I'll be paying close attention to any ambushes/traps that are being set in the forex arena as we exit a very profitable September and open the books for Q4.



Clive Corcoran is the publisher of TradeWithForm.com, which provides daily analysis and commentary on the US stock market.