Forexyard Analysis

19/03/'08 - Dollar Bounces Back After Rate Cut

Economic News

USD

Yesterday, the greenback rose all across the board after that the Federal Open Market Committee (FOMC) voted to lower the US Interest rate by 75 pts to 2.25%. The Fed announcement, which returned below the expected 100 point cut, set the USD on a bullish run as it appreciated against most of the major traded currencies particularly the EUR/USD pair which dropped close to 150 pips. The FOMC decision came as a last hope to help the US economy and the greenback recover from what has looked to be recessionary behavior. Following the announcement, Philadelphia Fed President Charles Plosser made it public that he voted against the 75pt cut as he preferred less aggressive action at the Fed meeting. Investors felt a boost of confindence yesterday in regard to the severity of the financial difficulties in the US, as the combination of the lower cut and general objections by some of the board, may indicate that the economic outlook is not as bad as once expected. It certainly seems that the USD and the US economy have recovered from what had been some of its worst results since 1945.

Yesterday also saw the release of PPI figures as they rose 0.3% in February following a 1% increase in January. Core inflation rose 0.5% for the month, the largest gain since November 2006. The extremely high inflation in the US has increased speculations and worries that the country is heading toward a period of stagflation, a period characterized by economic slowdown and a rise in inflation. Another result of the 75pt cut yesterday was a sell-off on commodities. Gold and Oil prices depreciated yesterday after trading in and around all time highs last week. Gold lost $35 per ounce roughly 3.2% down from the day before and closed the trading session at a rate of 986.50. Crude Oil lost almost $5 per barrel losing 4.1% from its Monday value. Today the US is absent from any significant scheduled news events, as Crude Oil Inventories are the only news in tap, and should not contribute to volatility. Forex traders should follow indicators coming from the Euro zone, the United Kingdom and Japan.

EUR

Yesterday, the Euro-zone was absent from the economic calendar and most of the Euro movement was contributed to the dominance of the Dollar yesterday. The EUR depreciated yesterday against the greenback on the back of key interest rate cuts in the US. The EUR retreated from its all time high at the rate of 1.5850 from last week as the pair closed the trading session down 150pts. However, looking ahead long term, the EUR is expected to recover and gain back some of its losses from yesterday, mainly as a result of the continuing positive indicators being released from the Euro-zone. Meanwhile the GBP appreciated against the USD and peaked at a three days high at the rate of 2.0255 in the first half of the day. However, after the Fed's key interest cut, the GBP lost most of its gains and closed the trading session at the rate of 2.0080.

Looking ahead to today, the only news expected from the European economy will be the Trade Balance. This figure is considered insignificant to Forex market movement and should not have any impact on EUR behavior today. Meanwhile, the MPC Meeting Minutes from the Bank of England (BoE) is expected to be released in the United Kingdom. The minutes are forecasted to show that 8 BoE members voted to hold the interest rate and 1 BoE member voted to cut it. Forex traders should follow this figure because it could have an extreme effect on the GBP behavior during the day.

JPY

Yesterday, Asian markets saw a steady rise on the back of the US Interest Rate cut. Scheduled economic figures from Japan were limited to the All Industries Activity Index yesterday. This had little to no impact on JPY behavior. JPY movement was dominated by the bullish greenback as it slipped all across the board, against all traded currencies. The JPY lost 3% of its value against the USD and the GBP and 2% of its value against the EUR and the AUD. The 75pts cut in the key interest of the US encouraged investors to re-enter risky carry trades funded by cheap borrowing in the JPY as well as going long with the USD/JPY, EUR/JPY, and GBP/JPY pairs. Today, BoJ Governor Fukui is expected to give a speech at 10:00 GMT in Tokyo. Forex traders should expect to see some indication regarding the BoJ economic policy for the near future. The JPY is expected to continue to be extremely sensitive in relation to the USD behavior. Toshihiko Fukui's five-year term set to expire on Wednesday. The Japanese government is set to present a new nominee, though there should not be much change in the overall outlook of Japanese economic policy. Today will be an interesting one for the JPY as it will be pulled between bearish behavior in the Forex market and bullish behavior in the stock market; it is safe to say that range trading should be expected.


Technical News

EUR/USD

After bottoming out at 1.5620 after the Fed rate cut turmoil, the pair appears to be resuming its familiar bullish path. The daily chart is showing a bullish cross on the slow stochastic as the hourlies are still moderately bearish. Buying on dips looks to be an excellent choice today.

GBP/USD

The cable is floating between two major Fibonacci key levels with bullish momentum on the daily chart. The 4 hour RSI is floating on the 50 level with a positive slope which indicates that we might see a test of the 2.0230 level before the weekend. Being on the buy side appears to be preferable.

USD/JPY

The 4 hour chart is showing that the bullish corrective momentum has diminished and is now slightly bearish. The bearish cross on the slow stochastic strengthens the bearish behavior of the pair, and could see a valid target price at 98.10.

USD/CHF

After a very sharp drop and a test of the 0.9630 level, the pair has shown a moderate correction. The daily chart is giving mixed signals, and the 4 hour chart is slightly bearish. Forex traders are advised to wait for a clearer signal before entering the market with that pair.


The Wild Card

Gold

There is a very distinct bullish channel forming on the daily chart as Gold is now floating on the bottom part of the channel. The momentum is now bullish again as indicated by all oscillators. This is a great opportunity for forex traders to rejoin the very strong bullish trend at an excellent entry point.
 
25/03/'08 - Greenback Goes Down Again

Economic News

USD

Yesterday's trading session was characterized by low liquidity as US markets were closed due to the Easter holiday. The greenback was consolidating yesterday against most currencies and showed no distinct trending. The calm status changes later on the overnight trading session as the greenback started to gain all across the board in a quite aggressive manner probably due to speculation that the Fed will continue to ease interest rates in order to try and salvage the ruins of the US economy.

"There are a variety of reasons for the dollar's general weakness. The major ones are the bearish outlook on the economy and expectations of more rate cuts. The Fed may cut rates by half a percentage point next month and another quarter point in June” said the head of economic strategy of Bank of America.

Despite the unexpected rise in existing home sales of 2.9% which was the biggest jump in a year, the greenback continued to linger in bear territory.

As for today, there are two major events expected to come from the US. The first is the Yearly National HPI Composite index which measures the annual change in the average price of a single-family home in 20 metropolitan areas. And is expected at 13:00 GMT The index is expected to be released at -10.5% and has a previous figure of -9.1%. A bit later at 14:00 GMT, the Consumer Confidence is expected to be released with a forecast of 73.5 which is slightly lower than last month's release of 75.00.

The expectations for weak US data will most probably help to push the greenback further down, and it appears that the short breath of fresh air which caused the greenback to gain against most currencies is probably over.

EUR

After last Tuesday's Federal Reserve's cut of the US key interest by 0.75%, the EUR began the trading week yesterday in a relatively bearish notion. The 15-nation currency saw no major movement after the day's first half, mainly due the lack of important figures release from both coasts of the Atlantic. However, later, the EUR sharply appreciated against the greenback adding 1.4% to its value in a couple hours.

The EUR pushed back from its bearish stance, which characterized it at the end of last week, mainly as a result of oncoming worries of another Interest Rate cut by the Fed attached with near term US recession speculations. Moreover, the positive economic signals released from the US yesterday, such as the Existing Home Sales report, did not helped the USD weakening move and the EUR/USD ended the trading session with an appreciation of more than 200 pips.

As seen on last week's German reports, the strong EUR keeps damaging the Euro-zone exports. This fact, combined with the high inflation rate seen recently in the Euro-zone, does raise speculations of ECB interruption to try relaxing the volatility of the market.

Today, there is no expected important news release from the Euro-zone. However, for the CHF investors, the Swiss Consumption Indicator for the previous quarter is expected to be released. The EUR will most probably keep its bullish trend for the short term, especially due to the fact that the US's Consumer Confidence release today is not expected to bring the USD to recovery.

JPY

Eight of the 10 most-traded Asian currencies outside Japan climbed as demand for higher-yielding assets increased after sales of existing homes in the U.S. unexpectedly rose last month and after JP Morgan raised its bid for Bear Stearns Cos. It appears that The consistent cuts in the US interest rate have diminished the carry trade cycles to a non existing status.

The JPY reacted relatively softly in relation to other currencies as the USD/JPY dropped less than 80 pips, whereas most of the other currencies appreciated much more against the USD.

There are two events expected to come from Japan, as both are considered to have moderate importance and effect on price movements. The first one is the Corporate Services Price Index (CSPI) which measures the rate of inflation experienced by corporations when purchasing services, and has a forecast of 0.7%. The second event and the slightly more important one is the Japanese Trade Balance which has a forecast of 0.77T and a previous release of 0.86T. It appears that the JPY will continue to gain today, especially on the back of the struggling US economy, and the stable Japanese monetary policy.


Technical News

EUR/USD

The pair corrected to the 1.5300 levels which is a key Fibonacci level yet failed to make a bearish breach. There is a bullish cross forming on the daily chart, and together with a sharp bullish spike it appears that there is now more room to run upwards. Next target price might be 1.5660.

GBP/USD

The cable is in the middle of a bullish trend which according to the daily chart has positive momentum. The RSI is floating at 50 and the slow stochastic is showing no reversal crosses. It appears that the bullish trend might continue with a target price of 2.0070.

USD/JPY

There is a very distinct narrowing bullish channel forming on the 4 hour chart as the pair now floats on the bottom barrier of it. The slow stochastic is showing a triple top formation with a positive slope, which indicates that the continuation of the bullish trend is quite imminent. Going long might be the right way to go today.

USD/CHF

The bullish channel which was initiated at 0.9800 continues with full momentum. The Slow Stochastic of the 1 hour chart implies on an additional bullish move, and the RSI is showing that there might be a breach through the upper level of the channel in the next 48 hours. Going long with tight stops might be preferable today.


The Wild Card

Gold

Gold has been showing a very strong and violent bearish trend which started at the peak price of 1026.00 and bottomed at 909.00. The 4 hour chart is starting to show fresh bullish momentum, and the cross on the daily slow stochastic directly indicates a bullish corrective move. This could be a great opportunity for forex traders to be on the buy side again, at a very low entry price.
 
07/04/'08 - USD Goes Up Despite Weak Jobs Report

Economic News

USD

The USD pared its gain against the EUR on Friday as investors digested the U.S. March Unemployment Report and the Nonfarm Employment Change figures. Last Friday's Payrolls hit the -80K mark, marking the biggest decline in 5 years. Unemployment also spurred downside risks for the economy as it rose to 5.1% from 4.8%, and heightening the bearish sentiment for the U.S. economy in general. In fact, Fed Chairman Bernanke acknowledged last week that the economic expansion may slow down significantly, as homebuilding, employment and spending deteriorate. As for the USD, it will probably continue to move lower in the next couple of months, until the U.S. economy improves. Fed Chairman Bernanke, for example, expects a return to trend growth as early as 2009. Export, is another key economic factor. By now, exports are really keeping the U.S. economy from falling into a much deeper recession. The export boost provided by a weaker dollar, which makes American-made goods less expensive for overseas buyers, is helping to avert a deeper slump in manufacturing. This week's Trade Balance figure may show the trade deficit shrank to $57.5B in March from $58.2B the prior month. Looking ahead, this week will be quite an eventful one as 3 major central banks - BoJ, ECB, and the BoE will meet to set their monetary policies. On Tuesday, Pending Home Sales are expected to fall, further dragging the U.S. economy down. The Consumer Sentiment report for this month is also expected to drop its lowest in 16 years. Today, however, we do not expect major price action in the USD as the Consumer Credit index is the only U.S. data to be released. The volatility is expected pick up on Tuesday as the FOMC will release their Minutes report at 18:00GMT.

EUR

The EUR declined last week against most of the major currencies on speculation that European economic growth will continue to slow. The single currency dropped 0.4% to the 1.5737 level vs. the USD, from 1.5796 a week earlier. In the past week, something went wrong with the EUR. Consumer Confidence within the Euro zone has fallen; Consumer Spending is contracting while German factory orders dropped 0.5%. The ECB is scheduled to meet on Thursday to discuss monetary policy and even though they are not expected to lower Interest Rates, there is a chance that Trichet will officially acknowledge the recent slowdown in growth. If that will happen, the EUR/USD will continue to lose height due to a tumbling sentiment. Given the recent turn in the European fundamental data, the next move by the ECB is a rate cut and the fate of the Euro will be determined by how quickly that happens. Looking ahead to today, we expect the Euro-zone GDP figures. However the figure is not likely to impact the EUR, which may slip slightly vs. the greenback today as traders exercise caution ahead of tomorrow's U.S. Pending Home Sales report.

JPY

Downward pressure on the USD intensified after the U.S. Employment data increased recessionary concerns, and spurred many investors to dump their holding of the troublesome currency. Last Friday, the JPY traded 0.5% higher against the USD at 101.86, but was still on track for its biggest weekly loss since 2004. The reason is the economy. One should keep in mind that there was a slowdown in Japanese business investment which in all circumstances remains a key driver of the economic growth. To make matters more difficult, Goldman Sachs Investment bank has decided to downgrade the Japanese car manufacturing industry. The bank fears that the major Japan industry might suffer from a decline in U.S. demand. As a result, the JPY will probably continue to lose ground against the USD.

On Wednesday, the Interest Rate Announcement will be followed by the BoJ's Monthly Monetary Report. With interest rates already at 0.5%, there is not much room for the central bank to move.

There is no important economic news expected to be released in Japan, however, today we should see active JPY trading in response to key U.S and Euro-zone data releases. The near term outlook for the JPY remains pretty bearish as a U.S economic redemption is unlikely to occur anytime soon and recession fears will continue to drive risk aversion.


Technical News

EUR/USD

The pair is floating between two key Fibonacci levels and is now showing bearish price movement. The 4 hour chart is showing a distinct bearish cross, and the daily RSI is floating around 50 which indicates that the bearish trend might continue. Next target could be 1.5620.

GBP/USD

The bullish trend on the 4 hour chart was stopped by a moderate corrective move which took the pair to the 1.9900 level again. There is a bullish cross forming on the 4 hour chart which indicates that the bullish reversal is quite imminent. Going long with tight stops might be a good strategy today.

USD/JPY

There is a very distinct bullish channel forming on the 4 hour chart as the pair now floats in the middle of it. The bullish momentum is back, and the slow stochastic is showing that there is still much more room to run up. Next target price might be 103.10.

USD/CHF

The pair has been traded in a range for a while now, and no distinct signal has been received on the daily level. The 4 hour chart is showing mixed signals yet the Bollinger Bands are getting much tighter which indicates on a possible close break. Traders are advised to wait for a significant breach and swing in on any direction.


The Wild Card

Gold

After the sharp bearish move which ended at 870.00, gold is now making a bullish comeback and is forming a tight bullish channel on the 4 hour chart. The RSI is strengthening the notion that the bullish move will continue which provides forex traders with a great opportunity to enter the market with a long position at a great entry price.
 
08/04/'08 - FOMC Meeting Minutes

Economic News

USD

The USD rose against the EUR yesterday on speculation the Fed is close to ending the biggest series of Interest Rate reductions since 1984. Stability in equity and credit markets raised optimism that the worst of the financial crisis might be over, encouraging investors to buy riskier assets. Yesterday, the U.S. currency advanced 0.3% to 1.5693 vs. the EUR, however later deteriorated and closed trading at 1.5718. The greenback has been receiving support after the recent stabilization of the financial markets, as seen by Lehman Brothers, UBS and now Washington Mutual having the ability to raise cash, will allow the Fed to refrain from further rate cuts.

While sentiment toward the dollar had improved, worries about the overall health of the U.S. economy continued to cast a shadow over the market, restricting the greenback's gains. The U.S. central bank has reduced the federal funds rate by 3% since September, pumped $628 billion through the financial system, and allowed securities firms to borrow directly from it for the first time since its creation in 1913. Rate futures are pricing in a roughly 36% chance of a 50 basis points rate cut at the end of this month. Traders await this Friday's G7 meeting in Washington, D.C. to see if policymakers will agree on a plan to support the dollar because rising exports may be the only blessing of a weak currency in a slowing economy.

As for today's calendar, we expect Pending Home sales to have improved slightly in February to a level of 86.3 from 85.9 in the previous month. We also expect the FOMC Meeting Minutes which will contain detailed record of the committee's interest rate meeting held about two weeks earlier and might shed some light on future monetary policy. The USD, and US equity markets will most probably sail quiet waters until the release of the FOMC March meeting minutes at 14:00 EDT, which will than might push the greenback further up.

EUR

Traders supported the 15-nations currency on possible grounds that the ECB is widely expected to leave its key interest rate on hold without any reduction at 4 %. If the ECB does not reduce the key interest rate as widely forecasted, it will be an additional indicator for the wealth of the EUR-zone economy compared to the US, insuring again that the Euro-zone economy was not that badly affected by the financial crisis in the US markets. However, it seems that the UK economy was badly affected by the US's financial crisis. The Bank of England, which also meets on Thursday, is expected to cut the country's key interest rate by 25 basis points to 5%, trying to avoid a local rescission and to stop the effect of the financial crisis over the Atlantic. There is no expected important economic Data release in the Euro-zone today. Traders should follow the US's Pending Home Sales report release at 14:00 GMT and the FOMC Meeting Minutes at 18:00 to adopt a wide direction of the EUR/USD today.

JPY

The yen decreased against all of the major currencies as a rally in stock markets worldwide encouraged investors to buy higher-yielding assets funded by loans in Japan. The yen fell 1.2% to 102.67 against the dollar at 12:30 p.m. in New York, from 101.47 on April 4. Japan's currency declined 1% against the euro to 161.30, from 159.69. Data released in Japan overnight saw the February leading index of economic indicators rise to 50.0 from a revised 36.4 in January while the Coincidence Index improved to 44.4 from 20.0 in January.

The Bank of Japan Rate decision on April 9 will most probably keep its target lending rate unchanged at 0.5%, the lowest among industrialized countries, as economic expansion cools, according to all 41 economists surveyed by Bloomberg News. Traders see a 59% chance the bank will cut the benchmark rate by year-end, according to JPMorgan Chase calculations. The tight expected monetary policy and few optimistic opinions on the future status of the US equity market will probably take the USD/JPY to a moderate bullish trend as the Japanese economy continues to weaken steadily.


Technical News

EUR/USD

The daily chart is still very bullish as both the slow stochastic and the RSI are floating in mid level of 50. The 4 hour chart is showing a moderate bearish reversal signal, and the 1 hour chart is indicating an imminent bearish trend. Buying on dips with a very tight stop might be a smart strategy.

GBP/USD

The cable is testing the key Fibonacci level of 1.9810 and is the middle of a very strong bearish trend. A breach through that level will validate a much stronger bearish trend that might take the pair to the 1.9730 zone. Going short might be the right path today.

USD/JPY

The bullish channel continues at full steam, as the 4 hour chart is showing that there is still much steam in the trend. The daily chart is showing a double doji formation with a bearish cross on the slow stochastic which might indicate a moderate corrective move before the bullish trend resumes. Buying on dips might be a great strategy for that pair.

USD/CHF

The daily chart is showing that the pair has been range trading with no distinct direction for a while now. The 4 hour chart is showing no clear signals as the RSI and the slow stochastic are floating on neutral territory. Traders are advised to wait for a clear signal before entering the market.


The Wild Card

Gold

There is a very distinct bullish channel forming on the 4 hour chart as gold now floats on the bottom barrier of it. It appears that if a significant breach through the 919.00 will not occur, the bullish channel will resume at full steam. This is a great opportunity for forex traders to swing into the bullish trend at a great entry price.
 
09/04/'08 - Ears Poised For Bernanke's Speech

Economic News

USD

Yesterday, the Greenback spent most of the trading day with bullish momentum against a majority of its currency pairs and crosses. This despite a day of disappointment from US economic news. As the financial world awaited the results of the Federal Open Market Committee (FOMC) Meeting Minutes, the assumption amongst investors was that the summary of the news would be so bad for the US economic outlook, that the dollar would suffer big losses. Though the meeting minutes were released and gave no real positive outlook for future economic progress, a sense of urgency still exists amongst investors regarding a slowdown in growth. Still though it is unknown what the real catalyst behind the bullishness has been.

One of the key points of the FOMC Meetings was the discussion of the value of the Dollar and the need or lack there of for another rate cut. Two of the more hard-line Fed bosses, have not shied away form their suggested 75bp rate cut, but instead have embraced what seems to be the foundation of a successful direction for the dollar. It would still be irresponsible for any analysts to use such contrasting results as reasoning for greenback movement. Also released yesterday was the index for Pending Home Sales, as the figure returned to its lowest point since as the creation of the index in 2001. Sinking just under 2% in one month, this figure could once again stir up some uncertainty about the ailing housing market.

The current credit crisis and housing issues have become indefinite realities as the US braces itself for more economy changing news throughout the week. As we look ahead to Friday and the beginning of the G-7 Meetings, it is important to note that amidst all the poor economic data of the past week and a half, including a record drop in Non-Farm Payrolls, the greenback is still being traded with confidence.

Today, we await several events on the US economic calendar. Crude Oil and Wholesale Inventories are both expected today and should have little change in market conditions, barring any drastic movement in the inventory figures. The more relevant events of the day will come from two of the FOMC's more influential title holders, as we expect speeches from Dallas Fed President Fisher and Fed President Ben Bernanke. These two should contribute directly Dollar movement, as history has shown us in the past. Expect dollar movement to be some what unknown until midday, where the release of events to come will likely shape the outlook of the day for the dollar.

EUR

The EUR spent most of Monday range trading due to the absence of any Euro-Zone related events on the economic calendar. It has become evident that the EUR is notching a dominant line in the battle for the world's most appealing currency. As we are less than one day away from EUR and GBP Interest Rate announcements it is clear to see the difference between the two currencies, and coupled in with the USD, the issue is only magnified. The British currently find themselves in a position similar to that of America, as a slow-down in growth is currently pushing investors further and further away from GBP and USD and closer to the EUR. As we await the commencement of the G-7 conferences, Expect the EUR, amidst reoccurring hawkish monetary policy from the E-Z to make slow strides against its most oft traded pairs.

On tap from the Euro-Zone today, we await the release of two mildly relevant events. Euro-Zone quarterly GDP and German Trade Balance figures will likely contribute little to EUR movement in the currency market. It is likely that the EUR will respond to outside news events in a positive manner throughout the day, and will see small rises if any in its value.

JPY

Risk behavior returned to the market yesterday as a wide range of economic data provided mixed results regarding the credit crisis being felt around the world. There looks to be a concerted effort by world financial organizations to stamp out the credit crisis once and for all. To do so would be a naturally risky move, one that would bring great liquidity to the Japanese market and the JPY.

The intervention of the IMF into global matters concerning the sub-prime crisis, suggests that the severity of the problem is far deeper than most would think. The near 1 Trillion dollars in losses that financial institutions could be forced to suffer is something that needs to be avoided, but not at the expense of any other economic aspect. The JPY now becomes a centerpiece, as carry trading is one of the more lucrative moves in the currency market and almost always includes the JPY. In other JPY related news, the Japanese Government approved the permanent appointment of Massaki Shirakawa. The appointment comes after weeks of tug-o-war within the Japanese Government. What can be said is that any stability from the office of the BoJ should contribute to possible JPY bullishness.

Today, we can expect a host of Japanese events. The BOJ Monthly Report, Machine Tool Orders, Core Machinery Orders, Current Account and M2+CD Money Supply are all expected to be released to mixed results. The JPY is poised for a breakout, the question simply becomes when. Today we also expect Interest Rate Announcements for the JPY, as expectations have the benchmark 0.50% rate staying put, as the current state of the BoJ is still unsure.


Technical News

EUR/USD

The pair is consolidating at 1.5710 and appears to be accumulating momentum ahead of the next break. The 4 hour chart is showing moderate bullish momentum, and the daily chart is showing that there is still more room to run, probably towards the 1.5800 zone.

GBP/USD

The cable is in the middle of a very sharp bearish trend after the breach through the 1.9800 level. The slow stochastic is showing a negative slope on the daily chart, and it appears that the bearish trend will continue. Going short might be a very wise choice today.

USD/JPY

The pair is still traded within the bullish channel as the direction is currently unclear. No significant breach has been made in either direction, yet there is a bearish hint in the form of a cross on the 4 hour Slow Stochastic. The Bollinger Bands are tightening which indicates that the break is near. Going short with tight stops might be smart today.

USD/CHF

There is a very distinct flag forming on the daily chart as the pair now floats at the tip of the flag. The slow stochastic is showing a bearish cross which might result in a breach through the bottom section of the flag. Traders are advised to wait for the bearish breach before swinging into the trend.


The Wild Card

Gold

The very accurate bullish channel has been breached, and gold is now in the middle of its bearish corrective journey. All oscillators are bearish, and forex traders have a great opportunity of taking advantage of this sharp technical event. Going short appears to be the right direction today.
 
14/04/'08 - U.S. Retail Sales On Tap.

Economic News

USD

Last week we saw the return of significant volatility to the Forex market. Amidst fears of Recession in the US, due to the housing and credit crisis as well as poor labor numbers, investors once again became weary of the dollar. The last part of March heading into April saw the greenback swing up and down after a host of key events and interest rate cuts dictated its movement. Different to last week, was the concern voiced by top US officials about Recession, this was also accentuated by what experts have called the most concerned American consumer base in the last 25 years. In response to worries, the dollar fell against most of its major currency rivals, seeing record lows versus the EUR. The $159.13 rate had some believing the dollar would see drastic losses, as the week ended the pair closed at a little over 1.58.

This weekend saw the Group of Seven (G-7) Finance Ministers and Central Bankers met in Washington D.C. Economic leaders from the United States, Japan, Germany, United Kingdom, France, Italy, and Canada met to discuss a host of economic issues. Surprising to some was the amount of concern held toward currency values and interest rates. It is no secret that the US and to some extent the UK have has to use interest rate cuts as last resort solutions to stopping the economic crisis that face their nations, especially in the US. The concern voiced over the dollar sent a shockwave through the currency markets, as weekend movement helped the opening of the EUR/USD pair in the Forex market to drop 150 pips.

The specific concern is the fear that unstable exchange rates will retard the world economies marketplaces. Also becoming increasingly worrisome is the rise in food prices around the globe. Essentials like Rice and Wheat have seen abnormal price gains, to the extent that countries both rich and poor are feeling the effects. As a result of the development from these meetings, investors are expecting more dollar bullishness mainly against the EUR. Investors will likely look to buy dollars to recover losses felt from the weekend shift in prices.

Looking ahead to this week, we expect to see a host of key economic data from the US which if positive could contribute even more to dollar bullishness. With intervention unlikely at this point by the G-7, US data will likely drive market trends. This week we expect to see a wide range of figures from all economic and production sectors in the US. Most notably, we await the release of the Empire State Business Conditions Index, PPI, TIC Net Long-Term Transactions, Core CPI, Industrial Production, Unemployment Claims and the Philadelphia Fed Manufacturing Index, all of which can contribute to movement in the market. These will be headed by today's release of Core Retail Sales, as the index is expected to show that last month saw a small rise in retail sales. We can also expect Business Inventories and a speech by Fed Governor Warsh. Volatile movement surrounding the Retail Sales release is likely; as a result bullish dollar behavior should be expected.

EUR

The EUR spent most of last week gaining against most of its currency rivals, namely the dollar, as a combination of positive Euro-Zone figures and poor US data sent the 15-Nation currency to record highs versus the greenback as the pair hit 1.59 and above.

Amongst last weeks volatility in American and Asian markets, the Euro-Zone showed once again that though inflationary concerns loom, stability and growth are helping carve out a reputable name for the EUR. ECB President Jean-Claude Trichet was steadfast with his hawkish stance on Euro-Zone monetary policy as yet another EU interest rate announcement passed by with no change. Last week the release of German wholesale numbers came back higher than expected, as it reaffirmed the one slight concern in the Euro-Zone which is inflation. As stated earlier, the G-7 meeting changed quite a lot as the EUR saw the greenback leap 150 pip to open Sunday's trading session, as other EUR crosses saw steady results. This week will be a news event dominated by the US as only significant European data will be the German Ifo Report. We should expect steady EUR growth, except for the famed EUR/USD which should continue to fall.

JPY

Despite broadly weak data the JPY managed to gain last week, as unsavory conditions for the carry trade weighed on the USD/JPY following the G7 finance ministers statement that global economic prospects have weakened and financial market losses will continue.

The Yen also rose against all of the major currencies as General Electric Co.'s first quarterly decline in profit since 2003 led to sharp declines in stocks and encouraged investors to reduce holdings of higher-yielding assets. The JPY first dropped to as low as 101.97, down from around 101.00 level in late New York trade, but later trimmed its losses and stabilized around 100.89.

In the next 48 hours, there is no fundamental data expected to come out of the Japanese market. Later, on Thursday, the news suggests that Japanese Industrial Production and the Household Confidence will remain low for the foreseeable future. Today, traders should keep an eye on the U.S. Retail Sales data as higher then forecasted printing might pull the U.S. currency up against the JPY.


Technical News

EUR/USD

After a very sharp drop at the opening session which took the pair on a dip of 150 pips, there is a certain consolidation around 1.5720. The daily chart is showing renewed bullish momentum, and the hourlies support. It appears that going long might be the better choice today.

GBP/USD

There is a narrowing bearish channel forming on the daily chart, as the cable now floats in the middle of it. The slow stochastic shows a negative slope and indicate a possible continuation of the bearish trend. If the cable will breach the 1.9680 level, we should be expecting a very sharp bearish drop to follow the breach.

USD/JPY

The momentum which was created after the pair breached through the very accurate bullish channel continues with full steam. All oscillators are showing very bearish momentum and it appears that the pair might have a target price of 100.00 on this move.

USD/CHF

The range trading continues without a distinct breaking direction. The daily chart is giving mixed signals and is mostly floating in neutral territory. The hourlies are showing moderate bearish momentum. It appears that going short with very tight stops might be a good decision today.


The Wild Card

GBP/JPY

There is a very interesting widening bearish channel formation on the 4 hour chart as the pair now approaches the bottom section. The momentum is very bearish according to all oscillators, which provides forex traders with a great opportunity to swing into what appears to be a very strong bearish move with a potential to be even stronger.
 
16/04/'08 - US Core CPI

Economic News

USD

Yesterday, the Greenback spent most of the trading day with bullish momentum against the majority of its currency pairs and crosses on the back of surprisingly strong U.S inflation and manufacturing data releases. The greenback added 0.35% to its value against the EUR locking the session below the rate of 1.58, after the first day this week for the USD to appreciate. Also, the strong U.S data release assisted the USD recovery against the Sterling and the JPY, stopping the bearish momentum which characterized the USD since Bernanke's speech last Wednesday.

We see yesterday's surprisingly strong U.S. economic data as a benchmark in the US financial crisis calendar. Those figures could be the first that clearly indicate that the US market is better condition than previously perceived.

March's PPI release yesterday came at the reading of 1.1%, well above February's inflation rate of 0.3%. Also, the important figure of the Empire State Business Conditions Index, which measures the general business conditions of manufacturers in New York State in March, showed a much higher than expected level of general business activity at the rate of 0.6, well above February's reading of -22.2. The figures released yesterday, combined with higher than expected cross-border foreign and domestic purchases of long-term securities in March, raise speculations that the sharp financial crisis in the U.S. seems to be controlled and finally restrained by the Fed's actions and interest rate cuts. Those positive figures also assist strong probabilities that the Fed is not likely to cut the key interest rate more than 0.25pts at the next FOMC meeting, if there will be a rat cut at all.

Today's colander is full of figures that could continue the USD bullish momentum and send the greenback prices even higher. March's Core CPI release is expected to show a 0.2% increase from February. Moreover, the value of output produced by factories, mines, and utilities in March, measured by the Industrial Production report released at 16:15 GMT today, is expected to rise by 0.4% from February. Forex traders should follow this figure release because it could supply many indicators for USD behavior. It is also interesting to mention Oil prices, that hit a new record, above $114 a barrel, on supply issues and rising demand in China. But the main factor contributing to high Oil prices is the weak dollar itself. The greenback is currently trading around the 1.58 level against the EUR; making safer commodities like Oil more attractive for dollar investments. In addition, due to oil being dollar denominated, as the dollar weakens, Oil prices should increase by relatively the same percentage. Also today, traders will await the Fed's report on regional economic activity, known as the Beige Book. As a summary of economic conditions throughout each of the 12 Fed districts, the report could give key insight into how the FOMC will vote on April 30. Overall, the outlook for the USD seems favorable. The latest positive fundamental data signals that the Fed cannot keep cutting Interest Rates aggressively while the economy is not deteriorating as fast as it was previously expected.

EUR

The EUR dropped from an intraday high of 1.5875 after the ZEW Economic Sentiment showed investor confidence unexpectedly fell this month. The European currency also fell vs. the greenback on surprisingly strong U.S. inflation and manufacturing data. The EUR/USD last traded down 0.3% at 1.5802, following an overnight peak of 1.5875. The economic data from the Euro zone continues to suggest that the region is beginning to feel the impact of its relatively high exchange rates and slowing global growth. As the ZEW demonstrated, European consumer are becoming concerned about the inflation and impact of higher food and energy costs on European consumers. Today all attention will be focused on the Euro zone CPI inflation data. The market is expecting the figure to be left unrevised at 3.5%, the highest record level recorded since the launch of the EUR. However, if the indicator surprises with stronger then expected figures, it might further continue to support the EUR. Given market expectations for the ECB to maintain its focus on inflation and leave the Interest Rate policy unchanged - traders may expect the EUR bullish trend to continue during the near future. Overall, today's data may not make much of a dent and the EUR/USD could spend the rest of the day in a tense standoff between the bulls and the bears as traders search for the best opportunities to enter the market.

JPY

The JPY fell vs. the greenback on the release of strong U.S. inflation and manufacturing data. The positive outlook for the dollar was also supported by the market belief that the Fed may not need to cut rates as aggressively. The carry trade has been restored and risk appetite seems to have returned to the market.

Both the Bank of Japan and the Japanese government recently noted increasing economic risks in the U.S. and their negative effects on Japan's economy. This suggests the BoJ will not be raising the overnight interest rate from 0.50% anytime soon. In the following days, the Japanese currency will continue to heavily depend on the volatility of the equity markets.

There was no significant economic news coming out of Japan yesterday and today is also devoid of data. We should see the JPY continue on its bearish path. Forex traders should keep an eye on the economic events around the world, as today could prove to be another very volatile day for the Japanese currency.


Technical News

EUR/USD

The pair has been range trading with high volatility for a while now, and it appears that the bullish price movement might be back. The Slow Stochastic of the 4 hour chart indicates an upcoming test of the 1.5895 level. If that level is breached, swinging in the trend would be the best strategy.

GBP/USD

The bearish flag pattern still remains intact on the daily chart, as the cable now makes a local correction. If the 1.9720 level is not breached we should expect the bearish trend to continue back to the bottom barrier of the flag. Selling on highs might be a good choice today.

USD/JPY

The pair has been showing stable bullish movement since the end of March with very few corrective anomalies. The Slow Stochastic of the 4 hour chart is showing a triple top formation with a positive slope, which indicates that the price movement might still be bullish, but is approaching its final stage. Going long with very tight stops might be a good strategy today.

USD/CHF

The daily chart is showing that the pair still does not have a distinct direction, as the chart appears to be quite horizontal for the past month. The Bollinger Bands are very tight, and the 4 hour Slow Stochastic is showing a bearish cross. It appears that the possible next move might be a bearish one. In that case traders are advised to swing in after the break.


The Wild Card

Crude Oil

The very important resistance level of 113.00 was breached and the bullish move has been validated. The Slow Stochastic of the 4 hour chart is showing that oil still has plenty of steam in that move. forex traders have a great opportunity to join this very strong key break and enjoy the rest of the bullish momentum.
 
23/04/'08 - The USD Reaches All Time Low

Economic News

USD

The U.S. economy is facing fresh difficulties that will probably further dampen the national currency. Yesterday, the greenback tumbled to fresh lows trading as low as 1.6022 vs. the EUR after the European Central Bank policy makers signaled they may raise Interest Rates due to inflation concerns. The USD extended its drop against the EUR following the low printing of the US Existing Home Sales in March. Falling house prices and rising mortgage risks continue to slow the U.S. economic growth. As a result of shrinking sales, builders are forced to pare back construction and reduce prices. A tumbling dollar also prompted investors to purchase commodities. U.S. Crude Oil rose yesterday to a record 119.90 a barrel in New York, gaining on a Nigerian supply disruption and a U.K. refinery strike threat. Crude from Nigeria, Africa's biggest producer, is low in sulfur and is prized by U.S. refiners because of the proportion of high-value gasoline it yields. The falling dollar and higher global demand for raw materials have led to records this year for commodities including gold, corn, soybeans and rice. Today, there is no significant news expected from the U.S. markets. Traders should closely watch the fundamental data from the Euro zone as it may determine the future USD direction. Today, we may expect another volatile trading session for the greenback. There is a possibility that the dollar will further weaken, finally stabilizing above the 1.60 mark against the EUR.

EUR

The EUR rallied against the USD yesterday and traded above 1.60 after ECB officials said they are ready to increase Interest Rates if inflation doesn't slow. The EUR reached the 1.6022 level, but later gave back some of its gains, finally closing at 1.5978. A European Union report showed last week that annual inflation rose to a 16-year high of 3.6% in March. The ECB's concerns over inflation have increased with the recent rise in Oil prices and it has therefore sharpened its tone. Yesterday, ECB Member Noyer stated that the bank would do what is needed to bring inflation back to its target of just below 2%, adding the central bank would move rates if needed. Still, the ECB is seen keeping rates at least at a 6 year high of 4.0% for a while. In contrast, markets expect the Fed to lower benchmark U.S. rates further from the current 2.25% at a policy meeting expected on April 29-30. Today's European fundamental calendar is relatively stuffed with events. Service and Manufacturing PMI numbers will shed more light on how well the Euro zone economy is holding up given current market conditions. Also, ECB President Trichet is expected to deliver a speech later today in Spain. The speech will be closely followed by investors for hints on future ECB monetary policy. Today, we may see the EUR extending its gains vs. the USD if the Euro zone news will indeed surprise on the upside.

JPY

The JPY depreciated vs. the USD yesterday after Oil prices hit a record high of $119.90 a barrel. The Yen tested bids around the 102.80 level and was capped around the 103.50 level.

The relatively strong Yen and the rise in raw materials costs is the worst combination the Japanese economy could wish for. The weak dollar continues to weigh heavily on exporters in general and Japan's automakers in particular.

Traders are also closely watching the food situation in Japan. Asian demand for rice remains very high. On one hand, Japan is facing a major food shortage, while on the other hand it imports more than half of the food it consumes. Yesterday's Trade Balance released at 0.77T, well below the forecasted figure of 0.89T. bLater today, we will see the All Industries Activity and the CSPI indices posting there results. Apart from that, Forex traders should keep an eye on the economic events around the world, as today could prove to be another very volatile day for the Japanese currency.


Technical News

EUR/USD

After a touch at the all time high of 1.60, and a failed attempt to validate a breach, the pair consolidates around 1.5980. The daily oscillators are very bullish, and indicate the continuation of the bullish trend. The hourlies are still moderately neutral and a local correction might be in place. Waiting for the validated breach beyond 1.60 and swing should be a very good strategy today.

GBP/USD

The 4 hour chart is showing a strong bearish cross on the Slow Stochastic and RSI is floating around 50. The daily chart is in neutral territory with no distinct signal on any side. Waiting for the bearish momentum to grow before entering the market could be a good choice today.

USD/JPY

There is a very distinct bullish channel forming on the daily chart, as the pair now floats in the middle of it. The daily Slow Stochastic is bullish, and the hourlies confirm the bullish notion. Going long appears to be a preferable strategy today.

USD/CHF

The range trading the pair is going through in the past month is forming into a horizontal narrowing flag, as the pair now approaches the end of it. The momentum is moderately bullish, and the Bollinger Bands are very tight, which together indicate a potential move quite shortly. Traders are advised to wait for the breach through the flag before swinging, as it might be quite strong when it occurs.


The Wild Card

Crude Oil

The violent bullish trend continues at full steam without showing the slightest pause for consolidation. A fresh all time high has breached on a daily basis, and the end doesn't appear to be close. Forex traders are advised to join the bullish trend with relatively loose stops, until the first signal of a slowdown is received.
 
24/04/'08 - USD Saga Continues.

Economic News

USD

Yesterday, the Greenback spent most of the trading day with bullish momentum against the majority of its currency pairs and crosses. The USD gained almost 0.9% and closed trading around 1.5850 vs. the EUR after it previously dropped to 1.6019, the lowest level ever. The dollar gained after a weak printing of the European manufacturing activity suggested that economic growth in the Euro zone is starting to slow.

European Economic data and official comments start to turn against the Euro and in favor of the US dollar. Comments made by the ECB Governing Council member Noyer yesterday, dampened speculation of the possible Interest Rate increase in Europe, giving the USD another push forward. Fed fund futures are currently pricing in an 82% chance of a quarter point rate cut next week with the remaining 18% probability in favor of no rate cut at all. This is a sharp change from just a week ago when the market was estimating a 76% chance of a 25bp cut and a 24% chance of a 50bp cut. The only reason for this dramatic shift in expectations is the increased inflationary pressures.

Today, we await several events on the US economic calendar. Durable Goods Orders and Unemployment Claims are expected to show improvement from the previous month. Later today, the New Home Sales figures are also expected to attract trader's attention. Earlier this week we had better than expected US housing market numbers. We would not be surprised to also see a recovery in new home sales. These two should contribute directly USD movement, as history has shown us in the past. Expect the USD to have another volatile trading session today. The release of today's fundamentals will likely shape the near term outlook for the greenback.


EUR

The EUR spent another day on the bearish side of trading yesterday, as it lost ground for the second day against the US dollar closing at 1.5873. During the week the EUR/USD broke new records going above the 1.60 mark which slowly hurts Euro-economic zone. With a full schedule of events from Wednesday, a basket of mixed results sent the EUR falling most notably against the Greenback. The downturn has been largely due to internal economic issues over the strength of the EUR. Manufacturing PMI numbers suffered yesterday and forecasts point toward business confidence sharing the same fate.

Today, German IFO Business Confidence Indexes are coming out, and the forecasts expect a decline for the month of April. IFO Climate and Expectations figures will must likely drop the EUR down further. The problems with the Euro-Zone now have some questioning the benefits of such a strong current. At 8 GMT along with the German IFO numbers we will get Euro-Zone Current Account details, which should not contribute to volatility. Later on in the day European Central Bank President Jean-Claude Trichet is expected to speak. His remarks generally bring volatility to the market. Looking forward to Friday's events, expectation for the M3 money supply are quite negative and with today's result might bring EUR/USD to new records.


JPY

The JPY saw mixed results yesterday as Dow Jones prices sparked some renewed interest in carry trading. While most JPY crosses lagged, the USD/JPY did rise 0.7 percent to 103.76 yen, from 103.02. Risk appetite has stalled in general, as many are still not seeing proper Equity market movement to take risks with the low-yielding currency.

Yesterday saw the release of CSPSI figures as well as the All Industries Activity Index. Both came back with negative results but had little effect on the market, as most of the movement came from global news events. Later today Japan's Core CPI and Core Tokyo CPI will be posted; expectations are mixed. And Friday will be a slow news day.

With rice achieving new records on the Chicago Mercantile Exchange going as high as $894 per metric ton, consumers in the United States are being limited in their purchasing ability. This new record is caused due to poor harvests and is derived from the laws of supply and demand. Given the published indicators from yesterday, the Yen's bearish movement, high rice prices and the expectations today we should assume a continuation in this downward direction.


Technical News

EUR/USD

The pair has made a substantial bearish correction, and is now floating around a key Fibonacci level 1.5850. The hourly chart is showing a bullish cross with growing bullish momentum, which indicates that if a bearish breach through that level will not occur, we shall probably see the bullish trend resumes. Traders are advised to hold for the breaching attempt before making an entry.

GBP/USD

The 4 hour chart is showing that the bearish momentum is back with full steam ahead, as the cable lost more than 200 pips in the last 48 hours. The daily Slow Stochastic is showing no crosses, which indicate the continuation of the bearish trend. Going short appears to be preferable today.

USD/JPY

There is a very distinct bullish channel forming on the daily chart, as the pair now floats in the middle of it. Both the daily RSI and Slow Stochastic are showing that there is still plenty of room to run up, and that the next target price might be 105.00. Going long appears to be the right choice today.

USD/CHF

The range trading on the daily chart is starting to form into a narrowing bullish channel. The pair if approaching the upper level of it, and with the very tight Bollinger Bands, the possible test of the 1.0230 appears to be quite imminent. Traders must pay attention for a possible breach which could create a great buying point for a strong potential bullish momentum.


The Wild Card

Crude Oil

The very strong bullish trend continues uninterrupted for the past month, as oil keeps ignoring all technical indications. The daily oscillators are showing a very bullish three top formation with a positive slope on the Slow Stochastic. This is a great opportunity for Forex traders to join the still very strong trend when the steam is still quite high.
 
28/04/'08 - USD Gaining Power

Economic News

USD

Last Friday, the greenback kept up its sharp bullish momentum against most of its major rivals. The USD gained as a result of favorable economic data, which was released from the US during the last week, combined with disappointing indicators released from the Euro-zone. The USD added almost 1% to its value against the EUR, appreciating from Wednesday's all-time low of 1.6017. The greenback also climbed to a 2 months' high vs. the JPY when it closed trading at 104.80.

By midday Friday, the USD strengthened against the EUR, trading in a range of 156.55 to as low as 155.90. Speculations on the FED halting Interest Rate cuts and a rally on the dollar during the week, which may have led investors into taking profit ahead of the weekend, supported the dollar during trading session.

It's a major shift in sentiment regarding the outlook of Interest Rates and we may see the dollar strengthening until the next Fed meeting. The perceived odds of the Fed keeping its benchmark Interest Rate unchanged at 2.25% at its meeting next week rose to about 26%, according to the futures. Just over a week ago, futures were evenly split between a 25- and a 50-basis-point cut.

Also, a number of important growth data will be released this week, including Q1 GDP, ISM Manufacturing and Non-Farm Payrolls. NFPs are expected to fall negative for the 4th consecutive month, indicating that consumer spending will continue to deteriorate as record high energy and food prices sap disposable income. Tuesday's economic data will likely highlight some of the reasons why traders are ramping up speculation that the country is in midst of a recession. Markets are expecting some poor numbers which does not leave much room for a downside surprise.

Until then, we expect last week's positive indicators to keep supplying traders with reasons to buy USD.

EUR

Last Wednesday the EUR reached a new all time record, rising as high as 1.6017 vs. the USD. That move took place after 3 bullish days for the 15-nation currency, mainly due to strong German data releases. However, between Wednesday and Friday, the EUR lost 2.7% of its value after weak indicators release increased inflation speculations from the Euro-zone. The EUR bearish movement came also as a result of strong economic data coming from the US. Recent positive US fundamental printings contributed to a stronger dollar momentum especially vs. the EUR.

The only important data released on Friday was March's German Import Price Index, which came out well above the expectations of 1.1%. This indicator, combined with the previous CPI and PPI reports from the Euro-zone countries, depicts a rather melancholic picture regarding the inflation rate in Europe, leaving investors with no choice but to go short on the EUR. As a result, the EUR/USD pair locked the session at the rate of 1.5627, losing 0.7% on Friday alone.

Looking ahead, this week will supply traders with many figures that may allude to the size of the impact of the US financial crisis over the Euro-zone economy, and could give traders a vision of the EUR direction for the short term. Today, March's CPI report is due to be published. The report is expected to show an extremely high rate of inflation in the Euro zone, 3.5% higher than last year's. Aside from that, traders should mainly focus on U.S developments. The U.S has a bundle full of data planned for this week. Traders should stay keen as this week is expected to turn extremely volatile.

JPY

The JPY depreciated sharply against the USD on Friday, as a part of the global bullish trend of the USD. The USD\JPY opened the trading session at the rate of 104.36, and locked at the rate of 104.70, growing 0.2% in one single day.

Japan's economy supplied traders with almost only negative data, raising speculations that the country is currently on the fast lane to local financial crisis and even a sharp recession, even though the world's economy starts to blossom and is showing signs of recovery. March's Tertiary Industry Activity Index, released on Sunday, came well bellow expectations with a reading of -1.7%, showing a deep damage to the services sector.

Also, Tuesday's Trade Balance report showed a non-expected sharp decrease in value between imported and exported goods and services. Last week's figures drew a very gloomy picture, reminding us of the late 80's financial crisis in Japan.

Considering that Japan is mainly affected by the Asian markets, and that its limited to only 3% imported rice, it is very interesting to see how the Bank of Japan will handle the increasing prices of cereals and meat. The BoJ have nothing to do with the increasing inflation rate and there is no key rate cut possible for the country. Today there is no trade in Japan due the Showa Day; traders may expect the Yen to remain calm and to be mostly sensitive to US data release. March's Industrial Production report, which is expected to be released tomorrow, is forecasted to show a 0.7% decrease in value of output produced by factories, mines, and utilities in Japan.


Technical News

EUR/USD

After bottoming at the key Fibonacci level of 1.5550, the pair is showing regenerated bullish momentum. The 4 hour Slow Stochastic is showing a bullish cross, and it appears that on the hourly level the next target price is 1.5680. Going long appears to be preferable today.

GBP/USD

The bullish momentum which was created after the breach of the flag is slowly diminishing. The daily chart is showing a increasing bearish momentum and the hourly Slow Stochastic is strengthening the bearish notion. With an estimated target price of 1.9710, it appears that going short might be a better choice today.

USD/JPY

The bullish channel on the daily chart is getting tighter, and the pair now floats near the upper section of it. The general momentum is very bullish, yet the hourlies are indicting a possible correction. It appears that buying on dips should be the best strategy today.

USD/CHF

The bullish momentum the pair has shown since the breach of the channel on the daily chart continues. The daily Slow Stochastic is showing the continuation of the trend, and the hourly studies confirm the bullish notion. Going long might be the right choice today.


The Wild Card

Crude Oil

The failed attempt to breach through the bullish channel from the bottom section has caused the bullish momentum to regain its strength. Crude Oil is now showing extremely strong bullish momentum as seen by the hourly oscillators. This is a great opportunity for forex traders to join the trend, with fresh all time highs being breached on a daily basis.
 
29/04/'08 - U.S. Consumer Confidence On Tap

29/04/'08 - U.S. Consumer Confidence On Tap

Economic News

USD

Yesterday the greenback showed off a bullish trend against its major currency rivals. It went through a bullish volatile session vs. the EUR, yet it lost strength against the GBP and the JPY. Even though the USD went through mixed trends yesterday, its main goal remained in tact as it kept a steady rate within the EUR\USD pair, trading around the 1.5645 range.

The most significant unfavorable news for the USD came from Japan. The Japanese who hold 12% of U.S government debt (over $550 billion) have suffered their worst quarter in treasuries in the last 10 years because the USD\JPY recently depreciated to its lowest rate since 1995. As a result, more and more Japanese investors are looking for different currencies to invest in, especially the EUR. Crude Oil seems to be another factor in the greenback's trend as it reached an all time high of $119.93 yesterday.

As for today, very meaningful data is scheduled at 14:00 GMT as the Consumer Confidence survey results are due. The figures are forecasted to decrease by 2.5 points, from 64.5 down to 62.0. The main reasons for the lower confidence are the worrisome employment situation, which count greatly in the survey, and the rising price at gas pumps, that rose by $19 over the last month. Lower reading points demonstrate certain pessimism by U.S consumers regarding the American economy, which may very well create bearish inclination within USD pairs.

Traders should stay tuned to the ongoing data releases from the U.S as it's looking to be a crucial point for greenback's future. Bullish behavior is imperative for the USD at the moment, as continuity of bearish trends might result in a long term falling trend for the greenback.

EUR

The EUR saw falling trends against its major counterparts yesterday, following a negative 0.2% decline in the German Consumer Price Index. Forecasts had the German CPI rising 0.2% this month after a previous 0.5% increase in March, however results were surprisingly worse than expected and the EUR had a bearish trend against the USD, slightly falling to the 1.5650 range after ending the previous trading day at a day high of 1.5680. President of the European Central Bank, Jean-Claude Trichet reiterated in a speech yesterday that the ECB considers that its current monetary policy stance, with its main interest rate at %4, will help achieve its medium-term price stability target and anchor long-term inflation expectations. Trichet pointed out that the ECB has injected a large amount of liquidity into the money market to ease tensions, yet it is focused on containing the inflation and will avoid changing its monetary policy stance and it seems that the interest rate will remain unchanged. It should be pointed out that the German Consumer Confidence did beat expectations and was announced at a rate of 5.9 vs. forecasts of 4.6; nonetheless this positive announcement was not enough to help the EUR rise after subpar German CPI results.

As for today, there are no significant economic results expected to be announced for the EUR currency. Traders should keep a close look at the result of the U.S. Consumer Confidence Index, which is expected to weaken compared to last month's results, and might reach one of its lowest readings in the last 5 years. If the Index declines significantly, the EUR will pick up a bullish trend against the USD. On the EUR's behalf, European Central Bank's Vice-President, Lucas Papademos will hold a press briefing in Frankfurt to present the second annual report on "Financial Integration in Europe", which should hint at the European Union's expectations of its economic growth.

JPY

The Yen appreciated versus its major currency competitors yesterday. This is reversal of the Yen's bullish trend from last week. The most notable gain was against the CHF as the CHF lost more than %1 against the JPY. In other important economic news from Japan, on Sunday Retail Sales rose slightly over the forecast to 1.1%. This increase was assisted by greater spending on fuel, due to higher global prices of Crude Oil. This rise is the eighth consecutive month in which Retail Sales increased, including a 3.2% rise from last February. Showa Day was observed in Japan on Monday and economic indicators were not published. Today the most important notable figure to be released is the Industrial Production, which measures the total value of output produced by industrial companies. The forecast is for it to come in as low as -0.7%, which should cause the JPY to trend downwards. The Japanese, who own 12% of U.S. government debt (586.6 Million), lost nearly 7% in the first quarter of the year when the Dollar fell to lowest levels since 1995 versus the Yen. Forex traders should expect a continuation of yesterday's bullish trend for the first half of the day, and a negative trend during the second half of the day after the publication of the new economic indicators. Volatility should be the name of the game today.


Technical News

EUR/USD

The pair has been going through a strong corrective move for the past week while breaching through several key Fibonacci levels. The bearish breach through 1.5670 has been validated, and fresh bearish momentum has been created. The next test should be around 1.5580 and if breached will cause the continuation of the bearish move.

GBP/USD

The 4 hour chart is showing the early stages of a bearish channel with the cable still floating near the upper barrier of it. The local momentum is still quite bullish and it appears that a test of 1.9920 might be quite imminent. A failure in the breach will probably lead to a fresh bearish move, with very high momentum potential.

USD/JPY

There is a very distinct flag formation on the 4 hour chart, as the pair is now bouncing up from the bottom of it. All oscillators are pointing up and the momentum is very bullish. It appears that the next target price might be around 104.95. Going long might be preferable today.

USD/CHF

The momentum which was created by the breach through the upper barrier of the channel on the daily chart continues with full steam. The 4 hour chart is still very bullish, as the daily chart is showing its first signs of a halt. Going long with very tight stops might do the job today, incase a bearish reversal will occur.


The Wild Card

Crude Oil

Breaching all time highs appears to be Oil's routine lately, and the today is no different. There is local bearish momentum created on the 4 hour chart, yet the daily momentum is still very high. Forex traders should look for a good dip to go long at, as the direction appears to be up.
 
15/05/'08 - Volatile Expected a Mixed Heavy News Day

Economic News

USD

Yesterday the greenback had a volatile trading session against its major currency rivals. It underwent contrasting trends vs. the EUR and the GBP and was bullish vs. the JPY. The main news from the US economy revolved around the Consumer Price Indices. The Consumer Price Index was released at 0.2%, a little bit lower than last month's 0.3% mark. The Core Consumer Price Index was also slightly lower than last month's 0.2% mark as it came in at 0.1% for April. The biggest repercussion from the reports is that the Fed can now cut rates once again if needed, rather than worry about rising inflationary trends. This very understanding might be what reversed the USD bullish trend into a bearish one.

Today, an extremely intensive news day can be expected for the US economy. First off on the day will be the Empire State Business Conditions Index. The index measures the general business conditions of manufacturers in New York State. Although the survey is limited to New York only, it's highly important as the New York Federal Reserve report serves as a precursor for national manufacturing numbers. Later on, the Treasury International Capital (TIC) Net Long-Term Transactions will be published. Analysts forecast it to release at 63.6B, well below last month's 72.5B mark. Such a descent should have negative effect on the USD. At 13:30 (GMT) Fed Chairman Bernanke will deliver a speech in Chicago on Risk Management in Banking Organizations. As always, Bernanke's speeches are very intriguing, as clues regarding interest rate changes might be scattered throughout. Considering that analysts predict an interest rate cut to be imminent, this particular speech could be vital. At 14:00 (GMT) The Philadelphia Fed Manufacturing Index will be published. Just like the New York Index, its importance derives from the fact that it's released weeks before other major reports on manufacturing.

Today will be a fascinating day for traders, yet it obligates them to stay fully alert. For today, trading the USD could create significant profits as high volatility is expected throughout most of the day.


EUR

Yesterday the EUR saw volatile trends within its major pairs. The EUR\USD began the day with a falling trend as it hit a daily low of 1.5413, yet it promptly rose up to 1.5473. The only significant gain for the EUR came against the JPY. European news from yesterday included the French Consumer Price Index. This Index which measures the rate of inflation came out at 0.3%, lower than last month's 0.8% figure. Later on in the day, the European Industrial Production report was published, and released at -0.2%, better than the expected -0.3% mark, yet lower than last month's 0.3%. Also yesterday, the Council of Economics and Finances Ministers held a meeting, where all of the Euro-Zone financial chiefs expressed concerns over the growing levels of inflation, yet they admitted their appreciation to the European Central Bank (ECB) reactions to the rising commodities prices, and stated they have full confidence that it will continue to act this way.

As for today, a bundle of data is expected for the EUR. The German, French and European Gross Domestic Product (GDP) reports are scheduled. These reports measure the total value of all goods and services produced by an economy. Analysts forecast positive results in all three reports, and rising trends are likely in light of these forecasts, as GDP is the primary gauge of an economy's health. Later on, the ECB President Jean Claude Trichet will deliver a speech. Trichet has avoided manipulating the European interest rate for the last month, despite rising commodities prices. Investors will follow his speech very closely, in the event that he gives any clues regarding a rate change, as it should instantly affect the EUR.

Traders should remain very keen today, as high volatility is expected. Lots of data coming from the Euro zone and the U.S should create fluctuation in the market. Traders should use this opportunity to create short-term profits.

JPY

Yesterday was an extremely bearish day for the JPY as it saw falling trends against most of its major counterparts. It has continued it's freefall since the beginning of the week vs. the USD, the EUR and the GBP. The only news regarding the JPY that came out yesterday was Core Machinery Orders, which reflected an 8.3% fall in March, making the value of orders in March the smallest since May 2005. It is the second straight monthly fall following a 12.3% decline in February, and for now it seems that the JPY is continuing to nurture its deterioration. On tap for today, the Japanese Gross Domestic Product is scheduled. This survey measures the total value of all goods and services produced by the economy. Analysts forecast it to come in lower than last month, and such unfavorable results will probably continue to contribute to the JPY downfall.

Traders should bear in mind that the Gross Domestic Product results will be published only at 23:50 (GMT). Hence until then the JPY will be mostly influenced by global economic developments, especially from the U.S. This day is promising to be a very volatile day for the Forex market, and the JPY shouldn't be any different.


Technical News

EUR/USD

The pair's bullish move is approaching the testing point of 1.5500 which is a key Fibonacci level of the entire bearish corrective move. The momentum is quite bullish and if a breach through the key level occurs, we might see the pair generate fresh momentum with a target price of 1.5580.

GBP/USD

There is a very distinct flag forming on the 4 hour chart, as the cable now approaches the upper level close to the tip of the flag. The local momentum within the flag is moderately bullish yet a very strong cross is imminent on the daily chart, which indicates that the bearish move might return shortly with strong steam.

USD/JPY

The pair is in the midst of the fifth consecutive day of appreciation and according to the daily chart there is still much more room to run. The hourlies are supporting the bullish notion, and it appears that going long might be the preferable strategy today.

USD/CHF

The pair has been ranging for a while now after the strong bullish move, and it appears that today the local momentum might be moderately bearish. Although the signal is not strong the pair might have a local target at 1.0450, which might make it feasible for forex traders to go short with very tight stops.


The Wild Card

Gold

The flag formation on the daily chart still remains intact, as gold now floats in the middle of it with moderate bullish momentum. The upcoming cross on the daily Slow Stochastic is showing that the bearish trend will probably resume quite shortly. This could be a great opportunity for forex forex traders the take a position before the technical signal is fully unraveled.
 
Forexyard analysis - All Eyes on the Dollar as Obama Optimism Continues

Dollar's Bullish run likely to continue today as European economies are set to go further into decline. The strength of the greenback is expected to remain strong, as long as traders are pleased with Obama plans for global economic recovery. The question now is can the Dollar regain its safe-haven status for the long term?

news1.JPG


Economic News

USD - Dollar Remains Bullish Despite Negative Data Releases

Despite a slumping U.S economy, the Dollar continued to perform well against most of its major currency pairs on Thursday. The Dollar shrugged off more poor disappointing economic data from the U.S. yesterday, appreciating against the EUR and the GBP. The U.S. Census Bureau reported yesterday that building permits missed analyst's forecasts while U.S. new Unemployment Claims rose by 44,000 more than forecasted.

The EUR/USD ended the day down at 1.2940, while the GBP/USD fell to 1.3752.
Since the New Year, the GBP has depreciated more than 5% against the Dollar and 10% vs. the EUR. The GBP has suffered lately, with most of the Sterling's losses occurring after the British government announced a second financial bailout package after large asset write-offs were reported by U.K. banks. Much of the Dollars' gains were viewed as providing a safe-haven from British and European economic woes.

The Dollar received additional support yesterday as the New York Federal Reserve Bank President Timothy Geithner moved one step closer to a successful appointment to Treasury Secretary. Geithner stated in his speech on Thursday that a strong Dollar was in the interests of the United States. This therefore led to the assumption by investors that Barack Obama's economic policy will be largely based on making the Dollar a strong safe-haven currency.

There is a fair possibility that the greenback will strengthen against its major currency crosses. For example, fundamental data due to be released today from Great Britain may help to continue the Dollar's bullish run on the week, as Britain is set for several highly significant data releases. The most important are British Preliminary GDP and Retail Sales reports at 9:30am GMT time. The results of these data releases are likely to determine the GBP's strength vs. the USD going into next week.

EUR - Rating Downgrade hurts the EUR

The struggles that the Euro-Zone economy is currently facing continue to put pressure on the EUR. Disappointing economic indicators have helped to bid down the EUR against the USD as investors view the EUR as a riskier currency. Therefore, from the point of view of traders, the Euro is starting to lose status as a safe-haven. Moreover, if the EUR continues to decline vs. the USD, then medium-long term safe-haven status may return to the U.S. Dollar.

Some of the recent declines in the EUR have been due to downgrades of the EUR's debt ratings. Both Greece and Spain were the main culprits, as they had their ratings lowered by Standard & Poor's (S&P). The two countries of the single currency have both been downgraded by the rating firm in less than 1-week. This is continuing to stir up renewed fears of a distressed Euro-Zone economy, and it is highly likely to raise the cost of borrowing for the two European Union members.

The rating downgrades are likely to weigh down on the EUR into next week. In addition, a prolonged economic downturn may further hurt other European nations, thus leading to a depreciating of the EUR against its major currency pairs. For today, traders are advised to follow economic data releases closely today. Poor economic news coming out of the Euro-Zone may push the EUR/USD to the 1.2850 level by the end of the day. In regards to the EUR/GBP, traders are advised to follow the release of Britain's quarterly GDP figures at 9.30 GMT. The result of this release is likely to determine the EUR/GBP rate going into next week.

JPY - Yen Rallies on Economic Data and Risk Aversion

The Yen continued its rally yesterday against the EUR and USD, as poor economic data from the U.S. and the Euro-Zone exemplified the down-ridden global economy, fueling trader's risk-aversion. The Yen has seen large gains as traders pour into the Yen, fleeing higher-yielding currencies. Its important to note that Japanese banks have not been hit as hard as American and European banks during this financial crisis, and a large amount of government foreign reserves has helped support the Yen. Some of the Yen's gains came late in Thursday's trading, as traders digested words from U.S. Treasury Secretary Nominee Timothy Geithner. He spoke about different issues relating to the global slump. However, this led investors to have less confidence in the USD vs. the Yen.

Yesterday the USD/JPY closed 46 pips lower at 88.60. This shows that the Dollars decline against the Yen is likely to continue, as currency pair is off nearly 2% for the year. More strengthening of the Yen could lead to increased intervention by the Japanese government to weaken the value of the Yen. A strong Yen is not good for the country's exports and the government is threatening to sell Yen in the open market, in order to drop the value of the nation's currency. If a further inclination and fear of risk ensue, traders may see more weakening of the USD/JPY to a level of 88.00 by the week's end.

Oil - Crude Oil Drops as Global Recession Deepens

Yesterday the price of Crude Oil dropped as investors digested more poor economic data and looked to the new U.S. economic stimulus package for supporting Crude. The U.S. Energy Information Administration released U.S. Crude Oil inventories data showing inventories were more than 6 times the level forecasted by analysts. Later in the day, Crude showed signs of a rally as traders found a bright spot in the quick passage of President Obama's economic plans quick passage in the U.S. House of Representatives.

Crude Oil finished the day down at $43.01, down 57 Cents. The price of Crude Oil is likely to decline in the coming days. This is due to the likelihood of demand continuing to weaken and the supplies of Crude Oil likely to grow in the short-medium term, as was seen in the inventories data. This trend is expected to continue for at least the next six months. Demand will only grow, when the leading economies recover from the global recession. Look for Crude to finish the week down further, perhaps at the $41.00 mark.

Technical News

EUR/USD
The 4 hour chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the daily chart's RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

GBP/USD
As a result of a significant downward movement yesterday, the pair has been pushed into the over-sold territory on the daily chart's RSI, indicating that an upward reversal may occur later today. The hourly chart's Slow Stochastic also appears to be showing an imminent bullish cross, which supports this notion. Going long with tight stops might be the right choice today.

USD/JPY
The pair has been range-trading for a while now, with no specific direction. The Daily chart's Slow Stochastic providing us with mixed signals. All oscillators on the 4 hour chart do not provide a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.

USD/CHF
Narrow range trading continues as the pair did not make a significant move in either direction, and is currently traded around the 1.15 level. The daily chart RSI is already floating in the overbought territory. It appears that the possible next move might be a bearish one. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.
The Wild Card

Gold
After a moderate bullish correction, this commodity is heading $857.08 per ounce. The daily chart is showing growing bearish momentum. This may prove to be a good opportunity for forex traders to join a potentially strong uptrend that might yield high profits.

news2.JPG
 
Forexyard analysis - USD Continues to Climb Higher on Weaker European Economies

The Dollar has strengthened in early trading as last week's worries of fundamental weakness in the European and British economies continue. Will the Dollar further appreciate as the appetite for riskier currencies dwindles?

news1.JPG


Economic News

USD - U.S. Dollar Starts the Day Strong Ahead of Busy Week

Pushing below 1.2800 against the EUR last Friday, the USD has seen some intense ups and downs ever since. In early trading hours Friday, the USD saw some significant gains against its primary European counterpart, but then turned around to lose it all, ending the day at 1.2970. Today, however, the USD appears to be back on the upswing. Starting the trading day with a sharp 50 pip gain against the EUR, the USD appears to be on track to recover the position it was heading for during Friday's early trading hours.

As confidence in the European markets dwindles, the U.S. Dollar appears more and more to be the safe-haven currency of choice for most investors. Despite the continuing downtrend in important economic sectors, such as housing - which has dropped consecutively for months now - the U.S. economy remains the king which many believe must be saved in order to rescue the entire system. As such, we see large investors bailing out of other currencies and shoring up their positions within the USD regardless of fundamental data.

This week will no doubt see high volatility in USD pairs as the U.S. economy is set to receive one of its busiest news weeks. On top of all of the information regarding Barack Obama's economic stimulus package being released, we also have a number of significant indicators coming out this week. Of primary importance is the first meeting for the Federal Reserve Board in 2009; they will be discussing the possibility of cutting the Federal Funds Rate even lower than its present target rate.

Moreover, two important pieces of information regarding the U.S. housing sector will be released Monday and Thursday. We also have the Advanced GDP report for the 4th quarter of 2008 coming out this Friday. Forex traders should mark these events in their calendars as they will no doubt generate exceedingly high volatility in the market, especially surrounding USD pairs and crosses.

EUR - Credit Downgrades of Smaller Euro-Zone Economies May Weaken EUR

The EUR has been experiencing some interesting price swings these past few trading days. With sharp fluctuations against the USD, JPY, and GBP, the 16-nation currency is poised for an important news week. Ending last week against the USD at 1.2970, the pair currently sits around the 1.2900 level as the greenback made strong gains earlier today, but is currently losing steam. Moreover, against the GBP, the pair is continuing to move steadily towards parity, with a current price of 0.9475.

As the economies in Portugal, Spain, Greece, and Italy are all experiencing a credit downgrade, some analysts are beginning to wonder what the benefit of multi-billion EUR bailout packages will offer when their focus is almost exclusively on France and Germany, leaving the countries on the periphery out to dry.

A type of "save the king" mentality may be present in the Euro-Zone, which believes that rescuing France and Germany will help stimulate the others to return to growth. However, the decentralized economic system in Europe, in a way, prevents such top-down overflow from occurring. The two economic giants will use bailout funds to shore up their assets and ensure the safety of their system, but possibly too late to effectively rescue these other countries before they are forced to declare bankruptcy and exit the European Monetary Union (EMU). This does not bode well for the Euro-Zone regional economy.

Looking ahead this week, the 16-nation Euro-Zone is anticipating important consumer data which will lend a better understanding as to how much confidence Europeans have in their economic system. With the regional unemployment rate reaching almost as high as 8%, and sales decreasing consistently, it may be right to assume that this consumer data will no doubt show a lack of trust in the EMU. It may be wise for forex traders to look for an unwinding of EUR positions as these consumer reports weaken the EUR in the coming days.

JPY - Yen Remains Strong; Japanese Economy Weakened

The Japanese Yen continues to gain in relative strength to its currency counterparts as the recent lowering of European interest rates has made the Japanese-funded carry trade less relevant. This comes as bad news for the Japanese economy. As its currency becomes stronger; its ability to sell goods overseas decreases, which further weakens its economic strength.

This week will highlight more specifically the negative impact the recent economic downturn and subsequent strengthening Yen has on the Japanese economy. With an unusually high number of economic indicators being delivered this week, the JPY could see one of its worst economic data releases since the financial crisis of the late-1990s. Every single figure to be given throughout this week is forecasted to be lower than the previous release, signaling very clearly how bad Japan's economy has gotten since this crisis started. Without a major market event to turn things around, Japan's economy, and currency, could face more difficult times up ahead.

OIL - Iraq Increases Oil Production by 8%; May Drive Oil Prices Lower

After making a sharp increase during the final hours of last week's trading, the price of Crude Oil appears to be stabilizing near $45.75 a barrel. Last Friday, the price of Crude Oil remained steady around $43 a barrel until the final hours of trading when the price jumped to reach almost as high as $47 a barrel prior to market close. However, most economists remain steady with their forecasts that the price of Crude Oil will continue downward once these small corrections lose momentum.

One of the reasons analysts claim the price of oil will sink in the coming days is because Iraq's oil producing and exporting capabilities has begun to increase these past few months. Increasing production by over 8% last month, Iraq, which remains outside of OPEC quotas while rebuilding its infrastructure, may actually put increased downward pressure on the price of Crude Oil unless the remaining OPEC countries cut their production to compensate for Iraq's sudden surge of oil surplus. Traders may want to look for the price of Crude Oil to continue on its downward slide.

Technical News

EUR/USD
After several failed attempts to breach the1.2750 support level on the 4 hour chart, the pair is now consolidating around 1.2900 price level. The hourly studies show mixed signals, and the daily charts support that notion as well. 4 hour charts' Slow Stochastic is showing a bearish cross suggesting that a downwards correction might take place in the nearest time frame. Going short with tight stops appears to be preferable strategy.

GBP/USD
The Cable has resumed its downtrend and is attempting to breach the 1.3550 level. The daily chart shows that the current price has dropped beneath the Bollinger Band's lower border, indicating that the bearish move is gathering more steam. Should the breach take place, the pair might further extend its bearish run, with a potential price target of 1.3500.

USD/JPY
The pair has made a substantial bearish correction, and is now floating around a key Fibonacci level 88.80. The hourly chart is showing a bearish cross which indicates that if a bearish breach through that level will occur; we shall probably see the bearish trend continue. Traders are advised to hold for the breaching attempt before making an entry.

USD/CHF
The bullish momentum the pair has shown since the breach of the channel on the daily chart continues. The daily Slow Stochastic is showing the continuation of the trend. It seems that the pair could face another bullish session today. Going long might be the right choice.

The Wild Card

OIL
The Crude Oil prices are once again increasing, and a barrel of Crude Oil is currently trading around $45.50. Now, all oscillators on the 4 hour chart are providing bullish signals, indicating that Crude prices will probably continue its upward momentum. This might give forex traders a great opportunity to enter a very popular trend.

news2.JPG
 
Forexyard analysis - European Currencies Strengthen as Stocks Rally

Yesterday's major market event appears to have been the announcement that Britain's 4th largest bank, Barclays, will not need additional bailout funds from the Bank of England. The resulting stability in the forex market led some investors to pull their investments away from currencies and back into the stock markets resulting in a worldwide rally in stocks. This pushed some currencies, such as the USD, to more realistic levels given recent negative economic data coming out of the United States.

news_1_270109.jpg


Economic News

USD - Dollar Slides against EUR and GBP on Risk Aversion

The Dollar slid yesterday by over 250 pips against the Pound and EUR to 1.4044 and 1.3211 on risk aversions. This was sparked by good news coming out of Britain's banking sector, led by Barclays, which said they won't need the 4-billion-Pound government aid for their investment banking arm. The reason why this led to the Dollar's decline against its major currency pairs, such as the GBP and EUR, is because when investors feel there is less risk in the market they invest in riskier assets. Therefore, investors drop less risky assets and currencies, such as the Dollar, and pour their money into riskier assets, such as shares in the stock market.

This is a pattern that we are likely to see over the coming weeks. For example, when it looks like the global economy is improving, and the recession seems it may be ending earlier-than-anticipated, then the safe-haven Dollar is likely to drop. This marks a contrast to last week, when the Dollar rose significantly against a number of its main currency pairs, such as the Pound and EUR.

The Dollar's decline yesterday was also due to the better-than-expected data release from the U.S. that showed Existing Homes Sales at 4.74 million, significantly higher than the forecasted 4.40 million. This resulted in a continuation of the Dollar's earlier gains. The combination of positive news yesterday on both sides of the Atlantic led to rallies in British and European stock markets, as investors abandoned the Dollar. The American stock market also made decent gains yesterday.

Looking ahead to today, the behavior of the Dollar may be similar to yesterday, as traders continue to reevaluate their portfolio. Traders are advised to follow the release of the CB Consumer Confidence figures coming out of the U.S. at 15:00 GMT. If the results are better than expected, then the Dollar may continue to decline against the Pound, EUR, and Yen. It is also advisable to follow the situation following the Senate's approval of President Obama's nominee for Treasury Secretary Timothy Geithner. It may take the currency market another day to digest the positive news for Obama and the U.S.

EUR - EUR and GBP Climb on Banking Rebound

The EUR gained on news from Britain that Barclays, Britain's fourth largest Bank, is scheduled to post better than expected profits. The importance of this is due to the fact that British and European banking stocks dropped dramatically last week; led by negative banking data coming out of Britain. This resulted in these 2 currencies declining significantly against their main currency pairs. However, so far this week, there has been a reverse in fortunes.

The EUR rose against the GBP by about 40 pips to 0.9405, as parity nears. The EUR and GBP rose significantly against the Dollar to close at 1.3211 and 1.4044 respectively. This comes about as British and European stock markets rallied as the positive banking news inspired investors to drop the Dollar. The other reason why these currencies were so volatile yesterday may be due to the fact that investors saw them as over-sold, and we may be seeing a price correction. However, only time will tell if this is the case.

Today, there is several important news events on the economic calendar scheduled for Europe. Coming out of Germany at 9:00 GMT is the German Ifo Business Climate report. Better than expected results are likely to push the currency higher against the EUR's major currency pairs. Britain releases figures on CBI Realized Sales at 11:00 GMT. Good results are likely to push the GBP up significantly against the USD and JPY. These 2 releases are likely to be the main determinants of the strength of the European currencies until the U.S. Stock Market opens later in the day.

JPY - Yen Slides on Stock Market Rallies

The Yen slid yesterday against the EUR and Pound, as global stock markets recorded impressive gains. This was sparked by Britain's Barclays Bank reporting that it didn't need to raise additional capital, as it is expected to release better-than-expected quarterly profits. This led to a considerable rise in British, European, and Asian stock markets, whilst U.S. stocks also posted gains. This confidence, which led to traders dropping the Yen, means that confidence may be returning to investors. The question is how long can this last? The answer depends on how quickly the global economy recovers.

If data releases today from Europe and the U.S. are better than expected, then the Yen is likely to lose further ground against its major currency pairs. It's important to take into account that a weaker Yen is better for Japan as this may help the country's exports. There is a possibility that in the coming trading days the Yen is likely to drop the gains that it made against the Pound and the EUR last week. This could come about as these 2 currencies were over-sold. As Japan releases more data showing how deep their recession really is, investors may further unwind their trades from the JPY, to the USD, EUR, and GBP.

Oil - Crude Oil Declines on Demand Concerns

The price of a barrel of Crude Oil fell around half a Dollar, or 1.5%, yesterday as the Organization of Petroleum Exporting Countries (OPEC) fears that their production cut may not be adequate enough to support prices. The International Energy Agency (IEA) backed these claims, stating that demand for Oil will decline for a 2nd year in a row as the global recession is set to prolong. Analysts say that the expected 5% cut in OPEC output this month won't be enough to support the prices. This comes about as supplies of Crude Oil in the United States reached their highest level since August 2007.

In the meantime, one of the only ways to uphold Crude's price, and push it up to a more desirable price-level, is by OPEC agreeing to cut production further. They are expected to meet again in March as the drop in revenues has pushed many Middle Eastern countries into the red. Today, Crude Oil may reverse some of yesterday's gains if Europe and the U.S. post positive economic data releases. What may also put pressure on Crude's price later today is if Barack Obama and Treasury Secretary Timothy Geithner increase their tough rhetoric on taking the U.S. and the world out of this recession.

Technical News

EUR/USD
After peaking at the 1.3250 level, the pair has halted its bullish momentum and is now trading around 1.3216. The RSI on the hourly chart is located around the 60 level, suggesting that the bullish move has more room to go. Going long might be the right strategy today.

GBP/USD
Ever since bottoming at the 1.3550 level, the pair is now galloping full steam ahead and is currently traded around the 1.4056 level. The hourly chart is providing exclusively bullish signals; implying that another bullish session is forthcoming and the 4-hour chart supports that notion. Going long seems to be the right strategy today.

USD/JPY
The 4-hour chart is giving mixed signals with its RSI floating in neutral territory. However, the hourly chart's Slow Stochastic is showing quite a strong bullish momentum and the RSI confirms that the direction is indeed up. Going long with tight stops is a preferred strategy today.

USD/CHF
The bearish momentum the pair has shown since the breach of the channel on the daily chart continues. The 4-hour chart's Slow Stochastic is showing the continuation of the trend, and the hourly studies also confirm the bearish notion. Going short might be the right choice today.

The Wild Card

Silver
It seems that the bullish momentum is still relevant, and that Silver is heading up with plenty of room to run. The Bullish correction which took place 4 days ago seems to have larger potential as all oscillators on the daily and the hourly charts are showing fresh upward momentum. Forex traders have a great opportunity to join the bullish move at a very early stage and with a great entry price.

news_2_270109.jpg
 
Forexyard analysis - Economic Stimulus and Monetary Policy Spark a Dollar Recovery

The Dollar moved sharply higher as the Federal Reserve held its benchmark interest rate at a historic low while it is exploring other alternative methods for fixing the American economy. The passage of Barack Obama's economic stimulus package also lent weight to the notion that the U.S. is on track for a relatively speedier recovery than the rest of the world. Will these efforts pan out in favor of the USD in the long run?

news_1_290109.jpg


Economic News

USD - Dollar Strengthened by Fed's Statements

Yesterday's trading was highlighted by the Dollar's rally across the board after the release of the Federal Reserve's statement on Wednesday afternoon during the New York trading session. The greenback jumped against the EUR with the pair plunging below a significant support level of 1.3100. The Dollar also reversed most of its downward momentum against the Pound, closing the day at 1.4155. Against the Japanese Yen, the Dollar rose from 89.22 to end the day at 89.68.

The Dollar began the day in the red as traders feared the Fed may take up more unconventional methods of battling the U.S. economy's downturn. It was suspected that the Fed would buy long-term Treasury bonds in order to help lower U.S mortgage rates. There were also rumors in the market that the Fed would undertake efforts to prevent deflation from occurring. Traders have a negative view of these tactics as a rise in inflation would significantly hurt the Dollar's purchasing power.

Other traders have also taken the view that the Fed has been very aggressive in tackling the economic crisis in the U.S. The Federal Reserve was out in front of its European and British counterparts, slashing interest rates and aggressively adding bad banking assets to its balance sheet to support the U.S. banking industry. This has helped to create positive momentum for the Dollar.

Today's trading of the USD will focus on two pieces of fundamental data. Due to be released today is the core durable goods orders and new unemployment claims. Both indicators are expected to show sharp declines. This may hurt the Dollar in the short term, perhaps sending the EUR/USD higher to the 1.3200 mark by day's end.

EUR - Interest Rate Speculation Provides a Temporary Boost to the EUR

The EUR experienced high volatility in the wake of a speech by European Central Bank (ECB) President Jean-Claude Trichet. During a speech at the World Economic Forum (WEF) in Davos Switzerland, Trichet hinted that the ECB may hold interest rates steady for their upcoming policy meeting scheduled for Feb 5th.

The ECB has repeatedly reduced European interest rates in light of the economic recession in the Euro-Zone economy. Currently the Minimum Bid Rate stands at a record low 2.00%. Market analysts have forecast a rate cut of 0.50% during the ECB's next meeting. ECB board members must now balance the ability to ease monetary policy to fight the economic downturn in the Euro-Zone, while avoiding cutting rates too much too quickly. Policy-makers fear that a sharp drop in interest rates could lead to future inflationary pressures.

A report released today by the International Monetary Fund (IMF) was an updated economic forecast for the Euro-Zone economy. The IMF slashed its growth rate projection from a decline of 0.50% to a much larger contraction of 2.00%.

The Euro-Zone economy appears to be deteriorating faster then previously thought. But policy-makers may be sending mixed signals to the market. The ECB has not kept up with the Bank of England or the Federal Reserve in its mission to stem the tide of the economic downturn. Perhaps more aggressive moves are needed by the ECB. Then we may see some appreciation in the EUR.

JPY - Strengthening USD Puts Downward Pressure on the Yen

The USD/JPY was driven higher today on the Fed's comments and an increase in risk appetite. Fueling the appreciation of the Dollar was a rise in the Dow Jones Industrial Average. When U.S. equity markets rise, this pair tends to rise as well. Also fueling an increased risk appetite was the passage of Barack Obama's economic bailout plan by the U.S. House of Representatives. These factors helped to rally the USD/JPY to end the day at 89.68. The pair now stands at a one-week high.

The Yen is largely seen as a safe haven currency to be used during times of financial distress. As traders grow more comfortable taking on further risk, they will abandon their positions in the Yen for the USD and higher yielding currencies. Risk sentiment appears to be improving as the Federal Reserve and the Obama administration are teaming up to restore confidence and future prospects for a stable economic recovery. This may boost the USD/JPY in the near term and we may see the pair rise to the 91.00 level.

Oil - Crude Supplies Drop the Price of Oil

The price of Crude Oil dropped yesterday as U.S. Crude Oil Inventories were reported to be almost 2.5 times higher than forecasted. This helped to lower the price of Oil to end the day down at $41.51, though the drop in price was less significant than yesterday's plunge.

The rising inventories are an example of what is occurring in the market for Crude Oil. There is currently a glut of supply with wavering demand. Oil refineries have not cut production enough to arrive at equilibrium with demand. These market forces will settle once a return of confidence is seen in the global economy. Traders may look for further easing of the price of Crude Oil as the $40 mark could be in sight once again.

Technical News

EUR/USD
After witnessing a significant drop yesterday, this pair appears to have found a short-term equilibrium. The oscillators on all charts are indicating a lack of direction for this pair with the only useful information being given by the weekly chart's Momentum oscillator which shows that the downward movement may continue. Waiting for a clearer signal might be the right strategy today.

GBP/USD
It appears that the price is currently floating in the over-sold territory on the hourly chart's RSI indicating an upward correction may occur in the very near future. The price of this pair is also located near the lower border of the hourly chart's Bollinger Bands, which lends support to the notion of an imminent upward correction. Going long with tight stops might be the right choice today.

USD/JPY

The Slow Stochastic on the 4-hour chart is showing a bearish cross has just occurred and is pushing the pair further down. The weekly chart's Momentum oscillator also indicates a continuation of the downward movement. On the contrary, the hourly chart's Slow Stochastic may be forming a bullish cross in the near future, signaling the downward movement may witness an upward correction within a short time frame. Going long with tight stops might be a good strategy for the short-term today.

USD/CHF
The price of this pair appears to be floating in the over-bought territory on the 4-hour chart's RSI indicating a downward correction may be imminent. A bearish cross forming on the 4-hour chart's Slow Stochastic supports this notion. Going short might be the right choice today.

The Wild Card

Gold
The price of this commodity appears to be hovering near the over-sold territory on the hourly and 4-hour charts' RSI, signaling an upward correction may occur soon. The imminent bullish cross on the 4-hour chart's Slow Stochastic adds weight to this notion, while the weekly chart's Momentum oscillator also shows sharp upward pressure. As this commodity continues to surge upwards, forex traders have the potential to join the upswings by entering early at great prices and capturing their profits.

news_2_290109.jpg
 
Default Forexyard analysis - Dollar Goes Bullish Ahead of Advance GDP Release The Do

The Dollar has gone bullish since the beginning of yesterday's trading, and ahead of the release of today's release of Advance GDP figures at 13:30 GMT. Results better than the forecasted -5.4% is likely to make the dollar go from strength to strength as the trading weak comes to a close.

news_1_300109.jpg


Economic News

USD - Dollar Rises on Safe-Haven Status

The USD may further extend its gains against the EUR today; on speculation that growing evidence of a global slowdown will increase the appeal of the U.S currency to traders as a safe-haven. The Dollar closed at $1.2889 per EUR from $1.3120, rising over 230 pips, the biggest gain in three weeks. The Dollar was broadly supported on Thursday as risk aversion came to the fore and optimism rose over the latest U.S. monetary and fiscal stimulus measures, which pushed the U.S currency higher.

The greenback also advanced after the Federal Reserve made its announcement about buying Treasuries to help boost the U.S economy. On Wednesday the Fed kept Interest Rates near zero as widely expected, and said it was prepared to buy long-term Treasury debt if that would help improve credit conditions. Moreover, a separate report revealed sales of new U.S. homes plunged 14.2% last month to a record low, further dulling the appeal of higher-risk currencies and assets such as stocks and boosting safe-haven flows into the Dollar. Apparently, bleak U.S. economic data and falling share prices kept investors wary of risk, even as countries embraced further monetary and fiscal stimulus to boost their economic growth.

Against the JPY however, the dollar was down 0.7% at 89.73 Yen yesterday. The greenback's decline came as a result of the Federal Reserve unwillingness to provide more information about buying Treasuries, fueling speculation investors will favor Japan's currency over the USD. The Dollar and Yen have been viewed as safe-haven currencies amid the global financial crisis, and both of these currencies often fluctuate depending on perceived shifts in investors' tolerance for risk.

EUR - EUR Falls on Weak Economic Data

The European currency retreated from gains made earlier in the week against its major counterparts. Against the USD it was down about 2% at $1.2889, after hitting a session low of $1.2875, and versus the Japanese currency, the EUR was down over 2% at 115.18 Yen. The EUR currency slipped on comments by European Central Bank (ECB) President Jean-Claude Trichet, who said that the ECB could cut key Euro-Zone Interest Rates below the current 2%, in addition to more unconventional measures.

The weak economic figures which came out of the Euro-Zone reversed any significant gains that the EUR made against the Dollar in recent days. The underlining weakness in the European economy was data showing that German unemployment posted its biggest increase in nearly four years in January. In addition, the European Commission said its index of executive and consumer sentiment declined to a record in January. The index fell to 68.9, the lowest level since it was started in 1985. Analysts say that for many investors, the strategy appears to be simple: to avoid risk; which means funds are flowing out of the EUR and back into the Dollar and the Yen. The slowing economic growth of the Euro-Zone has prompted investors to repatriate funds from higher-yielding assets that might cause the EUR to decline further.

Looking ahead to today, there are 2 important economic data releases coming out of the Euro-Zone. The CPI Flash Estimate and the Unemployment Rate figures are set to be published at 10.00 GMT. If these figures are better than expected, then the EUR may reverse some of yesterday's declines. However, if the figures are in line with forecasts or worse, then the EUR may make additional losses today vs. the Dollar, Pound, and Yen. Forex traders are advised to pay attention to GDP figures coming from the U.S., and Consumer Confidence data coming from Britain later today, as this may determine the Euro's strength against the GBP and USD into the middle of next week.

JPY - Yen to Rise Further Due to Government Insufficiency

The Japanese Yen may rise further through the end of the country's fiscal year on March 31, as exporters buy the currency to hedge revenues, and money managers bring funds home amid the global slump. Analysts forecast that the market should expect even further Yen appreciation as the Japanese fiscal year comes to a close, as both corporate hedging and investor repatriation flows support the currency. The Japanese currency closed at 89.34 per Dollar from $89.68 yesterday. The Yen has gained 1% against the greenback this month, following a 23% rally last year. The JPY may continue to strengthen as investors unwind so-called carry trades, where they borrowed in the currency to invest in nations where benchmark Interest Rates exceeds Japan's 0.1%.

Recently, some important market players have called for more aggressive government measures to halt the Yen's rise. It's important to note that the strong Yen has significantly hits exporters profits. Even though the world is currently in a deep recession, it seems the Japanese government's policies are totally insufficient, according to many leading industrial leaders. Japan's Finance Ministry is unlikely to shield the country's exporters from a rising currency by ordering the Bank of Japan to intervene and sell the Yen. Some analysts predict that the structural Yen appreciation has yet to run its course as there remains scope for investors to unwind more carry trades, and they believe that JPY will appreciate further versus the USD, possibly to the 84 Yen within 3 months.

OIL - Crude Oil Floats on Weak U.S Economy and Strong Dollar

The Crude Oil prices failed to strengthen on Thursday, due to the release of another round of gloomy U.S. economic data, the world's top energy consumer. The failure of Oil to reverse recent losses was also owed to a strong U.S. Dollar in yesterday's trading. This came about largely due to reports showing U.S. unemployment rose to a record peak in mid-January, while new orders for long-lasting manufactured goods fell for a 5th month. The deepening U.S. economic recession has cut demand for fuel and contributed to the biggest 4-month buildup in U.S. crude stockpiles since 1990. Prices for Crude has dropped more than $100 since its peak last summer, ringing alarm bells for the Organization of Petroleum Exporting Countries (OPEC) nations dependent on Oil revenues. This has resulted in OPEC cutting output by 4.2 million barrels per day since September.

Crude Oil prices, however, were little changed yesterday, after settling at $41.56 a barrel. This was largely due to the fact that OPEC Secretary General Abdullah al-Badri said that the group would not hesitate to act again if the Oil price remained low, when speaking at the World Economic Forum in Davos, Switzerland. Oil producing nations are foresee that Oil will add to this weeks losses by the end of next weeks trading, as Thursday saw a potential U.S. Oil refiner strike and traders are speculating that a potential strike could affect supplies of refined products.

Technical News

EUR/USD
The price of this pair appears to be floating in the over-sold territory on the hourly chart's RSI indicating an upward correction might be imminent. The upward direction on the 4-hour chart's Momentum oscillator also supports this notion. Going long with tight stops might be the right choice today.

GBP/USD
The typical range trading on the 4 hour chart continues. Both the hourly RSI and Slow Stochastic are floating in neutral territory. However, there is a fresh bearish cross forming on the daily chart's Slow Stochastic indicating a bearish correction might take place in the nearest future. In that case traders are advised to swing in after the breach takes place.

USD/JPY
The pair has been range-trading for a while now, with no specific direction. The Daily chart's Slow Stochastic providing us with mixed signals. All oscillators on the 4 hour chart do not provide a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.

USD/CHF
The daily chart is showing mixed signals with its Slow Stochastic fluctuating at the neutral territory. However, the Hourly Chart's RSI is already floating in the overbought territory indicating that a bearish correction might take place in the nearest future. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

The Wild Card

Gold
The bullish trend is loosing its steam and the price is consolidating around the $906 for an ounce. The daily chart's RSI is floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.

news_2_300109.jpg
 
Forexyard analysis - Dollar Rallies on a Speculation of a Future Rate Cut by the ECB

The USD rose to the highest level in almost two months against the European currency ahead of a report tomorrow will show European producer prices slid a fifth month, giving the European Central Bank (ECB) more room to cut Interest Rates. As inflation is slowing and the Euro-Zone economy deteriorates, the Dollar is likely to increase further to as much as $1.27.

news_1_020209.jpg


Economic News

USD - U.S. Senate Might Reject Obama Stimulus Plan; USD Could Suffer

After last week's surprising bullishness against the EUR, the USD may be positioned to rise back up to price levels not seen since November. Ending last week at 1.2811 against the EUR, the greenback broke through a number of significant price barriers and continues to hold ground. However, the USD did not gain strength against every major currency. Against the British Pound the Dollar actually weakened to 1.4484 down from the 1.3660 seen at the start of the week.

With the week starting with troublesome news about Obama's stimulus package potentially being killed in the U.S. Senate, the USD may stand to lose ground if action is not taken soon to help the economy recover. U.S. Republicans stand in opposition to this economic stimulus package as it appears to be in favor of excessive spending and a lack of focus on areas which Republicans feel need more attention, such as housing. But if this package is killed in the Senate, will there be quick enough action to come up with a new package which will appease both sides of the partisan divide in time to rescue the U.S. economy from entering a deeper recession?

This week's upcoming news may indeed turn out negative for the U.S. economy, and the U.S. Dollar as a result. With Non-Farm Employment Change and the Unemployment Rate reports predicted to indicate a drop in employment across the United States, the U.S. currency will no doubt feel a pinch. Last week's 11th-hour rally may in fact get reversed by mid-week unless the results from these reports turn out better than forecasted. Otherwise, traders should look for a weakening of the USD back to levels above 1.3000 against the EUR.

EUR - EUR Experiences Bad Week; Could this Week be Worse?

The EUR witnessed a significant drop at the end of last week versus the USD, Pound Sterling, and Yen, as investors lost more confidence in the 16-nation currency. As the economic downturn worsens, traders and investors alike are searching for a proper safe-haven to store their money. Dropping below 1.2900 against the USD and falling farther away from parity with the British Pound last Friday to hit a recent low of 0.8800, the EUR has seen better days.

With most fundamental data being released about the U.S. stimulus plans and British banking crisis, the EUR appears to be receiving little attention. With this week's monetary policy meeting on the Euro-Zone interest rates looming, traders, while anticipating a decision to hold rates steady, perceive the EUR as a weak investment option compared with stronger safe-havens such as the U.S. Dollar. However, upcoming news about the U.S. Senate potentially refusing to pass President Obama's stimulus package, the EUR may benefit from an unwinding of Dollar positions in exchange for an alternative investment.

This week will, however, be an important week for the Euro-Zone economies. The European Central Bank (ECB) will be meeting to discuss interest rates, as will the Bank of England (BoE). These two rate decisions being held simultaneously could potentially guarantee that the two currencies of these regions - the EUR and GBP - may witness high volatility in anticipation of these rate decisions. As interest rate decisions lately typically revolve around rate reductions, traders are likely to see early sell positions being taken on these currencies, which will drive their value lower in the coming days.

JPY - Japanese Yen Maintains Holding Pattern

The Japanese Yen continues to trade in a limited range of prices as its economy remains largely on track to continue its recession. As the Japanese economy weakened in recent months, the JPY was pushed higher as a result of Japan's monetary and fiscal policies which intentionally held the Yen at an artificially low level while economic growth was bounding. As this growth unwinds and global interest rates are cut, the Japanese Yen reaps the benefits. But does this help Japan?

As is typically expected, there is not much fundamental data coming from Japan this week. Forex traders can expect the Yen to maintain its recent holding pattern as it awaits news from the European economies about this week's upcoming interest rate policy meetings. If European rates continue falling, the Yen is likely to experience another period of appreciation. If rates are held steady, risk appetite may help push the island currency above the price level of 91.00 against the USD and 121.00 against the EUR.

Oil - Crude Oil Prices Expected to Dip

After a couple days of trading around the $41 price range, the price of Crude Oil appears to be preparing for a week of downward movement. Recent recessionary fears carry the potential to push the price of this commodity below $40 a barrel for the first time since March contracts began trading. A few Middle Eastern oil producers have downgraded their growth forecasts as a result of declining prices, as well as speculation of a continuation of these downward price trends.

News surrounding the price of Crude Oil doesn't appear to be providing much information that hasn't already been stated time and time again by many analysts. The global recession still holds full sway over commodity prices. This growth slump maintains downward pressure on the price of Crude Oil, and will continue to do so into the near future.

Technical News

EUR/USD
The Slow Stochastic and the RSI on the daily chart are showing a continuation of the current bearish correction. There is also a very accurate bearish channel forming on the 4 hour chart. In addition, all indicators on the hourly chart are pointing down. Going short might be the right choice today.

GBP/USD
Ever since bottoming at the 1.3750 level, the pair is galloping upward with full steam ahead and is currently traded around the 1.4414 level. The daily chart is providing exclusively bullish signals; implying that another bullish session is forthcoming and the 1 hour chart support that notion. Going long seems to be the right strategy today

USD/JPY
The pair has been range-trading for a while now, with no specific direction. The Daily chart's Slow Stochastic providing us with mixed signals. All oscillators on the 4 hour chart do not provide a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.

USD/CHF
According to a daily chart this pair is still floating in a neutral territory with no distinct price direction. However a cross above the 70 line on the hourly chart's Slow Stochastic is indicating that the next move is likely to be bearish. Traders should wait for the breach and swing.

The Wild Card

AUD/USD
There is a very accurate bearish channel forming on the 4 hour chart, as the pair has consecutively dropped for the past three days. Currently, as the RSI on the daily chart is floating below the 50 line and the Slow Stochastic is pointing down, the pair might extend its bearish trend. This might be a great opportunity for forex forex traders to join a very popular trend.

news_2_020209.jpg
 
Last edited:
Forexyard analysis - Aussies Slash Rates; European Rate Cuts May Follow

The currency pair which could experience the highest volatility today may be the AUD/USD. The Royal Bank of Australia (RBA) slashed Interest Rates by 100 basis points this morning at 3:30 GMT. This would be the 5th consecutive rate cut by the RBA. In the coming days, the European Central Bank and the Bank of England are expecting similar meetings to their discuss interest rates. These falling global interest rates have been bouncing the market to bizarre highs and lows. Forex traders should take advantage of this volatility today and start opening large positions during these price swings.

news_1_030209.jpg


Economic News

USD - Risk Aversion Drives the Dollar Higher but Gains Fail to Hold

The Dollar began this week's trading by strengthening against its major pairs, only to rescind those gains against the EUR in later trading. Gains against the GBP held and the GBP/USD stands at a 1-week low. Risk aversion was the driving force in the currency markets yesterday and this theme typically lends support for the greenback. As risk recedes in the market, riskier bets that are funded by USD are sold and converted back into Dollars, helping to appreciate the currency.

The greenback saw a boost against the European currencies as Moody's downgraded the credit rating for Barclays Bank. This decreased traders' risk appetite, but would soon prove to be short-lived as the Institute for Supply Management's Index beat market forecasts. The report helped to spark a late-day rally in the EUR/USD, erasing the Dollar's earlier gains. Some traders reported thin liquidity in the forex market as a large snow storm didn't allow for many of London's traders to make it to their offices today. Stymied liquidity can help to exaggerate price swings in the currency markets. At one point the EUR/USD reached as low as 1.2705 but the pair would later rebound to close the day at 1.2874.

Looking ahead to today's trading session, a pair that may experience high volatility could be the AUD/USD. The Royal Bank of Australia (RBA) is forecasted to cut Interest Rates by the enormous amount of 100 basis points today at 3:30 a.m. GMT. This would be the 5th consecutive rate cut by the RBA. A dovish statement accompanying the rate cut could send the pair higher than the 0.6500 level. The pair has shed almost 10% this year on poor economic performance coming from down under.

EUR - Traders Await EUR Interest Rate Announcement

The EUR has taken a back seat lately, as fundamental issues surrounding the U.S. economy have been driving the EUR/USD pair. The release of the Obama administration's economic stimulus package and U.S. GDP numbers last week took most of the headlines, along with the gains. The pair dropped more than 1% the previous week on stronger U.S economic fundamentals and overall market risk aversion.

Today, market participants will await the release of the monthly German Retail Sales report. Germany is the Euro-Zone's largest economy and this report could provide a glimpse into the consumer sentiment going forward in a recessionary economic state.

On Thursday all eyes will be focused on the European Central Bank (ECB) and their decision to adjust European Interest Rates. Most economists forecast the rate will remain steady at 2.00%. This should create high volatility for the EUR/USD as the announcement approaches, creating ripe opportunities to make profits on these price spikes.

JPY - Government Gridlock May Hurt the Yen

An economic bailout package currently being debated in Japan may be delayed over a dispute between Japanese Prime Minister Aso and Japan's legislative body. The refusal of the Diet to pass a Japanese economic stimulus plan comes at a time when Aso's approval rating stands at an all time low. Aso refuses to call early elections while the Diet will not budge with the stimulus package until a date for the elections is set.

This could have a dire effect on the Japanese economy to overcome the most recent recession. Japanese Interest Rates stand close to 0%. This limits the government's options for tackling the economic crisis or influencing fiscal policy. But the strife between the Prime Minister and the Diet threaten any type of fiscal policy changes. Now that the government is deadlocked in a political stalemate, the economic recovery may be significantly slower than both its neighboring economies.

A delayed economic recovery could spell trouble for the Yen. Forex markets tend to be forward-looking and may begin to depreciate the Yen for suspected economic weakness. Any further delays to a government stimulus package may cost the USD/JPY to rise to back to the 95.00 level in the coming weeks.

Oil - Averted Refinery Strike Does Little to Lift Crude Oil

Crude Oil fell for the 4th consecutive day as the likelihood of a strike by U.S. refinery workers dissipated. Crude finished the day down more than 2% to close at $40.51. On Sunday, Oil refinery owners and workers appeared closer to a deal that would avert a strike.

Events such as these offer short-term traders the ability to profit from limited interruptions in the steady decline of the price of Crude Oil. Eventually the price of Crude will climb, but only when the market feels a bottom is approaching. Crude traders may not find any support tomorrow when U.S. Crude Oil Inventories are due to be released. We may see the price drop below the $40 mark once again in the coming days.

Technical News

EUR/USD
It appears that the bearish trend may have run out of strength as the pair currently floats near the bottom barrier of the daily chart's Slow Stochastic, suggesting that a bullish correction may be imminent. When the upward breach occurs, going long with tight stops appears to be the preferable strategy.

GBP/USD
The 4-chart is showing mixed signals with its RSI fluctuating in the neutral territory. However, the daily chart's Slow Stochastic is showing a bearish cross suggesting that the downwards trend may continue. In that case, going short with tight stops appears to be preferable strategy.

USD/JPY
According to the daily chart, this pair is still floating in a neutral territory with no distinct price direction. However, a cross above the 70 line on the 4- hour chart's Slow Stochastic is indicating that the next move is likely to be bearish. Traders should wait for the breach and swing.

USD/CHF
The pair is continuing to provide mixed results, and is now trading around the 1.16 level. The one-hour chart demonstrates a flat line since yesterday. The daily Slow Stochastic is showing no crosses, which indicates that the bearish trend may continue. Going short appears to be preferable today.

The Wild Card

Gold
The gold price is once again dropping and an ounce of gold is currently traded around $900. However, the hourly chart's RSI is floating in an over-sold territory suggesting that a recent downwards trend is loosing steam and a bullish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.

news_2_030209.jpg
 
Forexyard analysis - Risk Appetite and Stock Rally Weakens Dollar Safe-Haven

Witnessing a steady decline during yesterday's trading sessions, the USD became weakened as traders unwound their Dollar buy positions in exchange for riskier assets, such as stocks. The global stock rally seen yesterday may have been one of the leading causes in the Dollar's depreciation. With recent market optimism, traders may continue to see a small downward trend in the U.S. Dollar as its positions are unwound in exchange for higher yielding assets.

news_1_040209.jpg


Economic News

USD - Dollar Falls on Increased Risk Appetite

Investors ditched the Dollar in yesterday's trading session for more risky assets, indicated by the fact that the Dow Jones climbed by 1.8%. This was sparked by a report from Merck and Company that posted better-than-expected earnings. On top of this, investors became more confident as the new Treasury Secretary, Timothy Geithner, reassured Americans that the Obama administration will do everything in its power to lift the U.S. out of recession.

The Dollar's drop was also owed to surprising, but again, better-than-expected Pending Home Sales figures that led investors to flee the Dollar during late-hour trading on Tuesday. The Dollar lost ground against all of its main currency pairs; losing 180 pips against the EUR and closing at 1.3006. The GBP/USD rate finished up nearly 200 pips at 1.4391. Additionally, the Dollar was unchanged against the JPY, which closed at 89.57 yesterday.

Looking ahead to today, there are 2 important economic data releases coming out of the U.S. These are the ADP Non-Farm Employment Change report and ISM Non-Manufacturing PMI figures. These are set to be released at 13:15 and 15:00 GMT respectively. Matching, or worse-than-expected results, may push the USD lower against its major currency pairs. However, better-than-expected figures are likely to push the Dollar higher against such currencies as the GBP, EUR, JPY, and CHF. With employment data showing a steady decline, on the other hand, the ADP employment change report is more likely to show negative results. Traders may want to anticipate a negative news week for the USD.

EUR - EUR Records Mixed Results Ahead of Thursday Rate Decision

The EUR was affected by 2 main things in yesterday's trading. These are the global stock market rally and mixed feelings ahead of Thursday's Interest Rate decision by the European Central Bank (ECB). The U.S. stock market rally led investors to buy-back into the EUR, and dropping the Dollar, as investors looked for returns on risky investments in Tuesday's trading.

The EUR appreciated by 180 pips versus the USD to close at 1.3006 in yesterday's trading. The EUR/GBP pair closed at virtually an unchanged level of 0.9036 ahead of Thursday's Interest Rate decisions for both the Euro-Zone and Britain. Against the JPY, the EUR rose dramatically by 180 pips to close at 116.53. This was largely due to Japan's stock market rally. Overall, the EUR, which for the past week has been sold by most traders, is seeing these sell-positions unwind and is now making a small recovery. The question is whether or not this rally will continue throughout today's trading.

Looking ahead, the EUR today will not be receiving much support from fundamental news events. A service-based price index is expected to show that sentiment in European business will remain largely unchanged since this report's previous release, and retail sales for the broader Euro-Zone are forecast to drop, indicating further weakness throughout the region. With recent market optimism, it is difficult to determine whether this negative news will offset the unwinding of EUR sell positions, and most analysts say that it won't. Traders should look for a continuation of the EUR's recent bullishness, at least in the short-term.

JPY - Weaker Yen inspires Japanese Stock Market Rally

Investors dropped the JPY yesterday, initially inspired by the U.S. stock market rally and the pushed further by better-than-expected home resale figures from the U.S. Japan's stock market also rallied, as car makers, such as Honda and Toyota, made large gains. Other industries, such as shipping, made big gains as well.

The USD/JPY rate remained unchanged to close at 89.57. Against the Pound, the JPY slid over 170 pips to close at 128.93. Also, the JPY declined by over 180 pips versus the EUR to finish yesterday's trading session at 116.53. If the Japanese economy continues to publish better-than-expected results during today's trading, then we can expect much of the same behavior when it comes to the Yen versus its main currency pairs. For now, traders should expect the Yen to remain within its current trends as there is little news which can interrupt its recent behavior.

Oil - Oil Expected to Climb on Middle East Tensions

The price of Crude Oil rose by about $0.68, or nearly 2%, to $40.86, as the Israel-Gaza tensions reappeared on the forefront. Crude prices were expected to fall in yesterday's trading; however, the resurrection of the conflict prevented this from happening. It is likely that Crude prices will remain unstable in the coming weeks as these tensions continue to add instability to the oil market.

Today, the main event that may determine the price of Oil is the results of the U.S. Crude Oil Inventories at 15:30 GMT. If the release is higher than the forecasted 2.5 million barrels of Oil, then this may lead to a drop in Crude prices later in the day. On the other hand, if the result is lower than this figure, this may help boost the price of Crude Oil higher by the end of today's trading session.

Technical News

EUR/USD
The price appears to be floating in the over-bought territory on the 4-hour chart's RSI, indicating a downward correction may occur later today. However, the daily chart's Slow Stochastic indicates a recent bullish cross, signaling a possible continuation of the upward movement. In the short-term traders however may expect a downward correction, but longer-term traders may want to maintain their long positions today.

GBP/USD
Most oscillators display this pair floating in neutral territory at the moment, indicating a lack of direction. The 4-hour chart's Slow Stochastic indicates that the price may hit a bearish cross in the near future, but the weekly chart's Momentum oscillator is still showing steep downward pressure. Waiting for a clearer signal might be the right strategy today.

USD/JPY
The pair continues to hold its range-trading pattern with no clear sign of direction. However, there appears to be a bearish cross on the hourly chart's Slow Stochastic indicating an imminent downward correction. Going short with tight stops appears to be the right strategy today.

USD/CHF
The price of this pair appears to be floating in the over-sold territory on the 4-hour chart's RSI, indicating an upward correction may be imminent. A bullish cross forming on the 4-hour chart's Slow Stochastic supports this notion. Going long might be the right choice today.

The Wild Card

USD/CAD
It appears a bullish cross has recently formed on the 4-hour chart's Slow Stochastic, indicating that this pair's recent upward correction may still have some steam. Now would be a great time for forex traders to join this recent run and capture the remaining profits before the downward trend continues.

news_2_040209.jpg
 
You must log in or register to reply here.

Similar threads

F
Technical analysis of fxcbs
Replies
10
Views
2K
fxcbsar
F
S
Forex daily Analysis
2
Replies
36
Views
11K
SebsCubs
S
M
Data Will Be The Lynchpin
Replies
0
Views
1K
mercaforex
M
M
Better Activity But Still Cautious
Replies
0
Views
1K
mercaforex
M
N
Majors Technical analysis and news by fxmania
Replies
0
Views
1K
NoemiFX
N
Top