Forexyard Analysis

[forexyard]

Forexyard analysis - European and British Rate Cuts Expected Today!

Most currencies, with the exception of a few, have been leveling off lately in anticipation of today's interest rate decisions in Europe and Britain. The European Central Bank (ECB) has been forecast to maintain its current rate of 2.00%, but recent data might prove this forecast inaccurate. Britain, on the other hand, is expected to slash its official bank rate from 1.50% to 1.00% at 12:00 GMT today. These rate cuts will no doubt push the value of their respective currencies to new price levels. Forex traders should be in the market today, building their positions early before the announcement of these decisions, and earning lucrative profits from the aftermath.

Economic News

USD - The Dollar Spikes Higher Against the Euro-Zone Currency

The U.S currency held gains versus the EUR as it rose1.4% to 1.2848 on Wednesday after a report showed U.S. private sector employment in January fell in line with expectations. Against other major currencies, the USD remained steady, as investors were reluctant to tilt positions too far ahead of key events tomorrow; employment data in the United States and interest rate decisions by central banks in Europe.

However, analysts have said that traders should remain cautious about whether the USD would be able to sustain its gains as the fate of the stimulus plans still remains unclear. The greenback also got a lift against the EUR after news of a downgrade in Russian sovereign debt, which added pressure on the EUR on expectations Russia will be forced to sell EUR to rebalance its currency basket.

The Dollar was also higher against the Yen after a report showed the U.S. service sector in January shrank less severely than expected. The U.S currency gained 0.2% versus the JPY, rising to 89.41. The ISM data followed another report on Wednesday showing U.S. private sector job losses slowed slightly in January, which helped fuel gains in the USD. Economists say that despite the fact that the U.S. service sector has contracted for the 4th consecutive month, the pace of contraction is slowing down. Combined with the slightly positive employment report on Friday, this helps to improve risk appetite, driving the Dollar higher versus the Japanese Yen.

In today's trading, forex traders should focus on a number of important fundamental data coming from both the U.S and the Euro-Zone. We expect that these pairs may become highly volatile as the market awaits the U.S. labor market figures and Interest Rate decisions from the European Central Bank (ECB) and the Bank of England (BoE).

EUR - EUR Falls Broadly on Russian Downgrade

The EUR is trading near a two-month low against the Dollar on speculation the economic slump in Eastern Europe will cause the Euro-Zone's recession to deepen, and markets are worried that Eastern Europe's situation will get worse before it gets better. The EUR was traded at 1.2852, up from 1.2849 late yesterday. It reached 1.2706 on February 2, the lowest level since December 5. The EUR also tumbled against the Dollar and the Yen after Fitch downgraded Russia's long-term foreign and local currency ratings, sparking fears of a steep downturn in Eastern Europe. Against the JPY the European currency may decline further as traders increase bets that the European Central Bank (ECB) will cut Interest Rates further today.

The EUR also weakened yesterday as the European Union's (EU) statistics office in Luxembourg said retail sales fell 1.6% in December from a year earlier. Analysts say that in the Euro-Zone there is still a drip-feed of bad economic news, which is weighing on the EUR and keeping risk sentiment on the back burner. Data released earlier showed deterioration in Europe's dominant services sector, and separate numbers showed Euro-Zone retail sales falling more than expected year-on-year in December. The EUR has also declined 1.6% to 88.76 against the British Pound after a report showed the U.K. services industry contracted less than forecast in January, and U.S. companies cut fewer jobs than previously expected.

Many economists expect, looking at the state of the Euro-Zone economy, another Interest Rate cut by the ECB this week. But even with low inflation expectations, Governing Council members have indicated that the ECB would not follow the U.S. Federal Reserve and the Bank of Japan (BoJ) in cutting rates to zero. With little room to cut Interest Rates, analysts are starting to look what else central banks have in store, especially whether the ECB would start to directly buy corporate debt.

JPY - JPY May Rise to 80 against the Dollar by Mid-Year

The Japanese currency picked up steam again on Wednesday, prompted by a government stimulus package that has provided a boost to market and risk sentiment. The Yen's strength took the EUR down 0.7% to 115.52 Yen, while the Dollar eased 0.2% to 89.05 Yen. It strengthened to 87.13 on Jan. 21, the strongest level since July 1995, after gaining 23% last year as the global financial turmoil spurred investors to buy back into Japan's currency as they unwound carry trades.

Additional Yen appreciation is likely to shrink profits of exporters even further, weigh on share prices, and induce an increase in the repatriation of funds to Japan. According to analysts, this can become the worst-case scenario facing the Japanese government since a strong Yen is the most critical problem for exporters. As exports fall, economies shrink, deepening the recession and pushing the value of the Yen even higher, causing more damage and creating a downward cycle of harmful data for the Japanese economy.

Oil - Crude Oil Declines on U.S. Fuel Inventory Gain

Crude Oil prices settled near $40 a barrel on Wednesday, down slightly after the U.S. stock market fell and a government report showed U.S. oil inventories jumped more than twice the amount previously forecast. Fuel demand during the past four weeks averaged 19.5 million barrels a day, down 2.8% from a year earlier, the Department of Energy report showed. Crude prices dropped after U.S. equities retreated as disappointing earnings at Kraft Foods Inc. and Walt Disney Co. triggered a sell off in consumer shares.

Recently, Crude Oil prices have been firming up because of output constraint by the Organization of Petroleum Exporting Countries (OPEC), and perhaps a further cut by the cartel may not be necessary. Crude Oil has plummeted by more than $100 since hitting a record near $150 a barrel in July last year as the global recession has weighed on demand for fuel. OPEC, worried that the global economic downturn is reducing oil demand and pressuring prices, has promised to reduce oil production by a total of 4.2 million barrels per day from levels seen in September. OPEC's president said on Tuesday the cartel could remove more oil from the market if needed in order to boost prices.

Technical News

EUR/USD
There appears to be a bullish cross forming on the 4-hour chart's Slow Stochastic, indicating an upward correction is expected in the near future. However, almost all other oscillators are stuck in neutral signaling that this pair may be less volatile than expected. Going long with tight stops might be the right strategy today.

GBP/USD
Most oscillators are still displaying this pair floating in neutral territory, indicating a lack of direction. The RSI on the 4-hour chart indicates that the price is currently floating in the over-sold territory, however, indicating downward pressure on this pair. Going short with tight stops might be the right choice today.

USD/JPY
The pair continues to hold its range-trading pattern with no clear sign of direction. The price sits evenly between the Bollinger Bands on all charts, and continues to float in neutral territory on all oscillators. Waiting for a clearer signal might be the right choice today.

USD/CHF
There appears to be a bearish cross forming on the 4-hour chart's Slow Stochastic, signaling an imminent downward correction. The Bollinger Bands on the hourly chart also appear to be tightening, indicating some volatility could take place in the near future. Going short might be the right strategy today.

The Wild Card

Silver
The price of this commodity appears to be floating in the over-bought territory on the daily chart's RSI, indicating that a downward correction may take place in the near future. The price is also trading near the upper border of the daily chart's Bollinger Bands, signaling downward pressure. Also, the Bollinger Bands on the 4-hour chart appear to be tightening; forex traders may see some volatility in this commodity later today. Going short might be the wise choice today.

 

[forexyard]

Forexyard analysis - USD Heads Higher Before the U.S. Non-Farm Payrolls Release

The Dollar consolidated gains against the EUR and JPY before the high impact U.S. Non-Farm Payrolls Report is released today. This indicator always provides for extreme market volatility in the major currency pairs. Traders may find good opportunities to enter the market following this vital announcement at 1:30pm GMT.

Economic News

USD - The Dollar Gains Ground Ahead of U.S. Payrolls Report

The USD has strengthened against most of its major counterparts, continuing to prove that, for the time being, this is the solid currency that traders can rely on to provide them with steady profits. The EUR/USD stopped the upside move at a good resistance level of 1.2900 level and from then on the pair fell all the way down to the 1.2790 level. Risk aversion continues to give the Dollar strength and that is likely to continue until we see signs of stabilization.


The dollar rose yesterday on renewed hopes the Obama administration will shore up a tattered financial system, turning around markets that had tumbled on fresh signs of a deep recession. Moreover, U.S. Treasury debt prices also recovered slightly, as weak U.S. and Euro-Zone economic data trumped worries over an expected surge in new issuance, a day before the release of the widely anticipated payrolls report for January.


As for today, a batch of data is expected from the U.S. economy. These figures are expected to set the tone for the USD's pairs and crosses. Special attention should be given to the Non-Farm Employment Change which is expected to fall to 530K. Traders pay close attention to this figure as it has a strong correlation with the value of the U.S. Dollar. Also today, the Unemployment Rate is scheduled which should also have an impact on the market because if it delivers unfavorable figures it will validate a problematic U.S. market, and the USD is likely to weaken as a result.

EUR - EUR Fluctuates as ECB Keeps Interest Rate Unchanged

The EUR completed yesterday's trading session with mixed results versus the major currencies. The 16 nation currency fell against the USD, pushing the oft traded currency pair to 1.2790. The EUR experienced similar behavior against the GBP as the pair dropped from 0.8900 to 0.8745 by days end. The EUR did rise over 150 points against the JPY and closed at the level 116.38.


The European Central Bank (ECP) kept Interest Rates unchanged after four reductions since early October as officials gauge the severity of the recession before cutting borrowing costs again. The EUR may continue to be pressured as ECB President Jean-Claude Trichet said that despite the easing of inflation pressures, the door for further rate cuts will remain open in the next meeting. The recent string of poor economic data which stems from a deteriorating European economy suggests that Interest Rates may need to fall substantially in the months to come.


Looking ahead to today, the most important financial indicator scheduled to be released from Europe is German industrial production numbers. Analysts are forecasting this figure to increase from its previous reading. Traders will be paying close attention to today's announcement, as a stronger than expected result may boost the EUR.

JPY - Yen Rapidly Falls to One Month Low Against the Dollar

The JPY saw a very bearish trading session yesterday, losing ground against all of its currency crosses. The JPY fell to a one month low against the USD and closed at 90.80. Moreover, the Japanese Yen lost almost 150 points versus the EUR, closing at 116.38.


The Bank of Japan needs to keep an eye on the global economy and watch for the potential fallout that could come from this recent crisis. Japan's currency usually does well during times of economic downturn, but when investor confidence is restored, the market may see a sell attitude develop as traders return to their carry trades; selling JPY in exchange for higher yielding currencies.


Today, there is no major economic news expected to be released from Japan, however, we should see active JPY trading in response to key U.S. data releases. The near term outlook for the JPY remains relatively bearish. Therefore, traders are advised to follow US news and Euro-Zone data with extra precaution as they will mark future JPY price movements.

OIL - Oil Makes Light Gains in Early Trading

Oil prices rose slightly yesterday as part of a wider market rally on hopes the Obama administration's plan to shore up the financial system would help banks stem losses and revive lending. Prices had fallen earlier during yesterday's trading session as weak economic data stoked concerns about waning oil demand.


Recently, the lower demand has fueled the losses, and a rash of poor economic data this week has not provided any support. The U.S. Non-Farm Employment report today is expected to show a poor performance and traders may not see very much upside to Crude today.

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
This pair is still in the midst of a steady uptrend which is not yet showing any sign of leveling out. The RSI and Momentum on the 4 hour chart are still positively sloped indicating that there is still plenty of steam left in this bullish move. Once this pair breaches the 1.4680 level it's likely to make another sharp break upwards.

USD/JPY
Narrow range trading continues as the pair did not make any significant move in either direction. The daily chart is showing signs of a bearish momentum. The Bollinger Bands are tightening and a breach might be imminent to any side. A good strategy might be to wait for the signal and ride the momentum.

USD/CHF
The pair's bullish sprint has passed it through the 1.1700 level yesterday. As all oscillators on the 4 hour chart are pointing up, the pair might test the 1.1760 level - making a 2 month record.

The Wild Card

OIL
There is still a bearish configuration on the daily chart, indicating that the momentum is still down. The Slow Stochastic flows high supporting the notion that there is still room to run for this trend. In the shorter time frame there is a bullish cross forming on the hourleis indicates that there might be a small bullish correction before the bearish move resumes. Forex traders can maximize profits by selling on highs and taking advantage of a currently bearish trend.

 

[forexyard]

Forexyard analysis - The Market Anticipates a U.S Economic Rescue Package

The U.S. Senate is slated to vote early next week on an economic stimulus package totaling at least $780 billion that President Barack Obama said is needed to prevent the economy from sinking into a deeper recession. The world's largest economy entered a recession in December 2007, according to the National Bureau of Economic Research in Cambridge, Massachusetts. Gross Domestic Product contracted at a 3.8% annual rate in the fourth quarter, the most since 1982.

Economic News

USD - Will the Economic Stimulus Bill Help the USD Recover?

Last week ended with a dismal report from the U.S. Labor Department which showed Non-Farm Payrolls dropping an additional 598,000 jobs this month, the deepest employment cut in 34 years! Traders saw the USD drop against every major currency pair, save the JPY, as a result. After closing Thursday's session up against the EUR at the 1.2835 price level, the USD turned around and lost a healthy portion of its momentum Friday, closing the week at 1.2966. Against the Pound Sterling, the greenback continued to take on loss and is currently trading at 1.4843.

What's reassuring at the start of this week is the fact that U.S. stocks have begun to rebound as investors are anticipating a hasty passage of the economic stimulus bill currently in the Senate. Analysts began forecasting that this stimulus package would get passed rather quickly as a result of the poor employment data released on Friday. With such negative news in the jobs sector, the U.S. government will no doubt need to take quick steps to counter this recent turn of events as it appears to be spiraling out of control. But will this stimulus be enough to stave off further losses in the U.S. Dollar?

As far as news goes this week, the USD is not set to receive much information regarding economic releases. However, as this week may mark the passage of President Barack Obama's economic stimulus package, forex traders will see a flurry of speeches and press conferences being held by high ranking members of the administration on the future of the economy, among other topics. Information released in this fashion can sometimes carry subtle clues as to the future of other potential stimulus legislation as well as monetary and fiscal policies. If the bill is indeed passed this Tuesday, as many economists expect, it may carry the impact of boosting demand for U.S. goods and services, which will likewise increase the demand for the USD. Traders might look to an appreciation of the Dollar versus most of its currency pairs this week.

EUR - Despite Recent Strength in the EUR, Something is Still Missing

The EUR appears to be the recipient of much support lately as the other safe-haven currencies have taken a dive on recent economic data. The U.S. jobs market took such a beating last month that the Dollar appears to be feeling the effects and has now raised this pair back up towards the 1.3000 price level. The only currency appearing to be out-pacing the EUR's recovery at the moment is the British Pound. The EUR/GBP has continued to distance itself from the recent near-parity price levels and is now trading around 0.8750.

After the European Central Bank (ECB) decided to hold short-term interest rates steady at 2.00% last Thursday, the EUR has remained relatively flat against most pairs; continuing previous trends at a mild pace. However, once U.S. employment data was released on Friday, the EUR/USD saw a sharp appreciation of over 100 pips throughout the last hours of the New York trading session as a result of two factors. One was that the EUR benefited from an increase in risk appetite brought on by the assumption that the U.S. Senate will pass Obama's stimulus bill by Tuesday this week. The second factor was a depreciation of the major rivals to the 16-nation currency brought on by negative economic data.

The EUR has been in a relatively unstable position these past few weeks as traders don't quite know what to think of this currency. The USD has always been the safe-haven of choice, and the European economies typically fare well as a result of the French and German economies; yet something is amiss lately. Data doesn't seem to support the EUR, and that data which shows positive results, lately, has weakened the Euro-Zone currency contrary to forecasts. Until the Euro-Zone regains confidence in the markets, it isn't likely that forex traders will see a significant rise in the value of the EUR.

JPY - Japanese Yen May Weaken as U.S. Markets Rebound from Stimulus

The Japanese Yen has seen some signs of a small reversal against last week's downtrend against the USD. Ending trading on Friday at 91.81 against the Dollar, the JPY now trades near the 91.60 price level. With such poor employment data emanating from the U.S. on Friday, most investors were speculating that the U.S. government would take hasty steps to pass the economic stimulus bill proposed by President Obama. The bill is expected to pass during Tuesday's vote.

Adding to this is the prediction that Treasury Secretary Timothy Geithner is going to announce a bank consolidation plan aimed at controlling toxic mortgages on the balance sheets of many banks. These moves together will likely boost confidence in the U.S. markets and will help drive the USD higher versus the Japanese currency. The Yen has been the primary beneficiary of the recent financial crisis and recession as its currency is programmed to operate counter to the economic cycles. As the U.S. markets rebound, traders are likely to see a depreciation of the Yen versus its major currency pairs.

OIL - Oil Producers have High Hopes that Oil has Hit Bottom; But Has It?

After a short-lived spike in the price of Crude Oil last Friday, the commodity has apparently returned to its previous holding pattern and now trades around the $40 price level. Traders may actually be seeing the price of Crude Oil reach a stable price level. For the first time in months, the price of Light Sweet Crude has remained relatively stable with no clear indication of direction. We now have analysts claiming that $40 may be the lowest price Crude Oil will hit for the year 2009.

Not to be tempted into the fallacy of relying on such predictions, it is more likely that OPEC's production cuts, coupled with the recent weakening of the USD due to employment data, is the culprit behind the stable price of oil. Global energy demand remains low and the recession doesn't appear to have an end in sight. As such, the price of Crude Oil should still be under a downward pressure. The recent events just outlined above, however, are helping to support the price of this commodity. If the USD makes a healthy rebound after Obama's stimulus bill is passed in the Senate, and further oil production begins to arrive from Iraqi ports, traders are likely to see a continuation of the downtrend to the price of Crude Oil into the 2nd quarter of 2009 at the very least.

Technical News

EUR/USD
The bullish trend is loosing its steam and the pair seems to consolidate around the 1.29 level. The 4 hour chart's RSI is already floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. Going short with tight stops appears to be preferable strategy

GBP/USD
Narrow range trading continues as the pair did not make a significant move in either direction, and is currently traded around the 1.47 level. The 4-hour 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.

USD/JPY
The Daily chart showing that the pair is still in the bullish configuration; however, the RSI is already floating in the overbought territory. On the contrary, there is a fresh bullish cross on the hourly chart's Slow Stochastic indicating a bullish correction might take place in the nearest future. In that case traders are advised to swing in after the breach takes place.

USD/CHF
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. The 4 hour charts do not provide a clear direction as well. Waiting for a clearer sign on the hourlies chart might be a good strategy today.

The Wild Card

Silver
Silver prices rose significantly in the last 2 weeks and peaked at $13.07 for an ounce. However, daily charts' 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.

 

[forexyard]

Forexyard analysis - EUR Tumbles on Russian Banks Restructuring European Loans

The EUR fell sharply in late-day trading after it was reported that Russian banks may seek to restructure over $400 billion loans. This adds to the already fragile European banking system and highlights the considerable tension that still exists in the financial markets.

Economic News

USD - USD Regroups after Negative News for Euro Banks

The Dollar initially lost ground yesterday but recovered in late trading as forex markets shrugged off a delay to the much anticipated U.S. bank bailout announcement. Despite the postponement, riskier currencies gained favor and currencies such as the USD and JPY fell as traders' risk appetite increased.

The U.S. bank bailout package is expected to provide added stability to the global economy, restore confidence to shaky financial markets, and has the potential to boost U.S. economic growth. This is providing traders with new reasons to take on riskier positions. This type of trading weighed on the Dollar yesterday but the currency later recovered as the EUR/USD finished the day down at 1.2821.

The bank bailout announcement was delayed as officials in the Obama administration focused on details that could potentially hold up the approval of the $819 billion economic stimulus package in the U.S. Senate. Both bailout packages are being highly anticipated and it is yet unknown what impact they will have on the financial markets. Traders are advised to follow tomorrow's announcement by Treasury Secretary Geithner as he outlines the bank bailout plan. This key event may help decide the day's direction for the EUR/USD.

EUR - EUR Plunges on Russian Loan Restructuring

The EUR fell sharply in late day trading after it was reported that Russian banks may seek to restructure over $400 billion loans from foreign banks. The 16-nation currency also came under pressure after European finance ministers suggested it may be more difficult for European banks to borrow in the financial markets.

These two events drove the EUR lower across the board. The EUR/GBP finished the day down sharply at 0.8646 from 0.8771, and the EUR/JPY was also sent lower to the level of 117.17.

The EUR had built on its gains made since Friday and continued to rally through most of yesterday's trading as the new week began with more support for riskier currencies. Last week saw U.S. Non-Farm Payrolls post a higher than expected job loss numbers and this in turn helped to appreciate the EUR against the Dollar. However, these gains were quickly erased late last night amid the Russian banking news.

JPY - Traders May Look for Further Weakening in the JPY

The JPY gained against its currency pairs on news that Russian banks may seek to restructure loans to their European counterparts. This puts more pressure on the already struggling European banking sector. Japan is not without its own banking troubles considering Japan's largest investment bank and brokerage, Nomura, will seek new capital upwards of $3 billion. The investment firm is struggling to absorb its acquisition of Lehman Brother's Asian operations.

Yesterday the USD/JPY finished down at 91.36 while the GBP was at 135.51 Yen from 135.09.

Traders may be looking for further weakening in the JPY, specifically after U.S. Treasury Secretary Geithner's speech at 16:00 GMT. His outline of the U.S. banking system bailout may help reduce market risk. This could allow traders to dump their safe haven JPY positions for riskier currencies, depreciating the Japanese currency. Look for the USD/JPY to finish the day at the 92.00 mark.

Oil - Oil Settles below $40 Ahead of Inventory Data

The price of Crude Oil settled below the $40 mark yesterday as traders await Crude Oil inventory data due Wednesday. Many have predicated a rise in the price as the U.S. economic stimulus package inches closer to Congressional approval; however, the commodity has been range trading between $39-43 for the past 10 days, unable to find solid support.

Yesterday's closing price of $39.83 was still within this range. This is more than $100 off Crude Oil's peak price seen last July.

Wednesday's Crude Oil Inventories Report, combined with the passage of the U.S. economic bailout plan, has the potential to ignite a price rally. An unexpected drop in inventories could help to push Crude Oil above the $45 resistance level by week's end.

Technical News

EUR/USD
The hourlies show quite a wide range-trading with no specific direction; however, the daily chart's Bollinger Bands are tightening, indicating upcoming increased volatility. A bearish cross on the 4-hour chart's Slow Stochastic indicates an upcoming test of the 1.2800 level once again. If that level is breached, swinging in the trend would be the best strategy.

GBP/USD
The pair's bullish price movement continues within the bullish channel, which still has yet to be breached. The bullish cross forming on the hourly chart's Slow Stochastic supports the upward notion as well. The RSI is floating above the 50 level pointing to the continuation of the upward movement. Next testing point might be around 1.4950.

USD/JPY
After touching a base at 90.89, the pair now consolidates a bit higher at around the 91.46 level. All oscillators show that the bullish momentum will probably continue. The Slow Stochastic of the 4-hour chart is showing no crosses in the horizon, and the bullish momentum there appears to be intact as well. On the daily chart, this pair is still trending upwards and there are no imminent indications of a reversal. Therefore, traders can maximize profits by entering steady long positions.

USD/CHF
The bullish momentum continues full steam ahead within the bullish channel which still has yet to be breached. The 4-hour chart is showing a strong bullish cross, and the RSI on the hourly chart also supports the continuation of the bullish movement. Next testing point should be around 1.1780. Going long appears to be preferable today.

The Wild Card

Gold
There is a very distinct downwards channel forming on the hourly chart. A fresh bearish cross on the chart's Slow Stochastic implies that the bearish correction is quite imminent. The RSI on the 4-hour chart is floating below 40, supporting the notion that there is still more room for the downwards correction. Forex traders can maximize profits by taking advantage of a currently bearish trend.

 

[forexyard]

Forexyard analysis - Economies Writhe in Agony from Geithner Speech

U.S. Treasury Secretary Timothy Geithner gave a less-than-inspiring speech yesterday regarding the U.S. bank bailout program. Many analysts criticized the speech as failing to give enough specific details regarding the plan which led most to assume that this bailout may not be as well thought-out as originally assumed. Stock markets and world economies felt the pinch as investor confidence dropped following this event.

Economic News

USD - Dollar Records Mixed Results as Bank Bailout Plans Disappoint Investors

The Dollar recorded some mixed results in yesterday's trading as traders were disappointed by Treasury Secretary Timothy Geithner. Geithner spoke yesterday about the Treasury's plan for a new $2 trillion Dollar banking bailout plan. This follows the approval by the U.S. Senate of Obama's $800 billion Dollar stimulus plan. Geithner received criticism that he wasn't specific enough in his speech, leading to a lack of confidence in the Dollar and U.S. Stock market.

Against the EUR, the USD fell 40 pips to 1.2871 by the close of Tuesday's trading. The Dollar also lost ground against the JPY by nearly 100 pips to 90.36 as investors cut their losses and returned to what they saw as a safe-haven currency. However, against the Pound, the USD rose by 350 pips to close at 1.4481. This was due to a knock-on effect as the British economy has been extremely volatile as of late, especially as a result of the failing banking sector. Therefore, bad news from the U.S. means even more bad news for Britain and the GBP.

Looking ahead, Obama and Geithner need to show more substance in order to rescue the U.S. economy. Only time will tell if both stimulus plans will lift the U.S. out of recession. Today, however, does have some important economic data releases from the U.S. Firstly; Geithner is scheduled to speak again at 15:00 GMT. At 13:30 and 19:00 GMT respectively, the U.S. Trade Balance and U.S. Budget Balance figures are set to be published. If the figures are indeed as forecast, or worse even, the USD may fall against its major currency pairs. On the other hand, better than expected figures could lead to a bullish Dollar in today's trading.

EUR - Pound Tumbles Due to Aftershock of U.S. Treasury Speech

The Pound slid against it major currency pairs as it felt the shockwaves of the Pessimism in the U.S. following the disappointing speech about a banking bailout by U.S. Treasury Secretary Timothy Geithner. The British economy and British currency are extremely volatile due to negative news from the U.S. and Europe, as their economy has been hit worse than many other countries in the developed world since the start of this recent recession. For example, Britain's GDP is expected to decline the most out of the G7 nations, by over 2.8%, according to the International Monetary Fund (IMF).

The GBP slid by a staggering 350 pips to 1.4481 vs. the USD. It slid by 220 pips vs. the EUR, against the JPY it slid by an enormous 430 pips to 131.19. These large losses show that investors returned to safe-haven currencies in yesterday's trading sessions. The thing that this shows forex traders is that the Pound acts very negatively to uncertainty in the financial world. Therefore, a lesson for the future may be for investors to follow U.S. news events more closely, and use the GBP as bait. This is useful because the Pound is very volatile to both positive and negative economic news coming from the U.S.

Today there are several important news events that may determine GBP and EUR currency crosses. These are the British Claimant Count Change at 9:30 GMT, the Bank of England's (BoE) inflation report at 10:30 GMT and a scheduled speech by BoE Governor King also at 10:30 GMT. Positive news may lead to a reversal of yesterday's losses in the GBP. Traders are advised to watch the Euro-Zone's reaction to this as King's speech may lead to the European Central Bank (ECB) revealing more details about possible rate cuts next month. This may result in high volatility for the EUR's pairs in today's trading.

JPY - Yen Climbs as U.S. Bank Bailout Produces Pessimism

The JPY rose against its major currency crosses in Tuesday's trading, as traders flocked back to the safe-haven Japanese currency. This came about as stocks in the U.S. and Japan fell heavily following statements by U.S. Treasury Secretary Timothy Geithner concerning the new $2 trillion U.S. banking bailout plan. Traders reacted with pessimism as they saw very few specific details about how Geithner, Obama, and the U.S. government will go about salvaging the U.S. banking sector, and thereby save the U.S. economy.

The JPY rose 80 pips against the EUR in yesterday's trading to close at 116.39. Against the USD, the JPY climbed 100 pips to finish yesterday's trading at 90.36. The JPY rose by a staggering 530 pips versus the GBP in yesterday's trading to close at 131.19. Forex traders are advised to follow Japanese, U.S., and British data releases throughout today's trading. The results of these may determine the JPY's strength against its major currency crosses into the middle of next week's trading.

Oil - Oil Plummets on U.S. Stimulus Doubts

The price of Crude Oil dropped by $1.80 a barrel, or 4.5%, to $38.04 in yesterday's trading as investors lost confidence due to the weak statements made by U.S. Treasury Secretary Timothy Geithner regarding the U.S. banking rescue package. Additionally, even though the U.S. Senate passed the economic stimulus plan, the House of Representatives and Senate need to close the gap on the further disagreements about the stimulus bill. Furthermore, it seems that OPEC threats of further decreasing Oil production has not dissuaded traders from selling-off Crude Oil.

Oil is expected to tumble by another $2 to $36 a barrel by the end of this week, as U.S. Crude Oil Inventories continue to build up. The Crude Oil Inventories figures are expected to be released later today at 15:00 GMT. U.S. stockpiles of Oil are likely to increase into March, adding additional downward pressure to the price of Oil. It is advisable to follow economic developments coming out of the U.S. as these developments may be the main factor determining the price of Crude Oil in the coming months.

Technical News

EUR/USD
This pair has apparently been building towards a volatile price movement recently as all oscillators show the price floating in neutral territory. The Bollinger Bands on all charts are also beginning to tighten in anticipation of a significant movement. Traders should wait for the breach and swing.

GBP/USD
The price of this pair appears to be floating in the over-sold territory on the RSI of the hourly and 4-hour charts, indicating an upward correction may occur in the near future. A bullish cross also appears to be forming on the 4-hour chart's Slow Stochastic, adding support to this notion. Going long might be the right choice today.

USD/JPY
The pair has finally ceased range-trading and has recently moved downward; however, the price currently floats in the over-sold territory on the hourly and 4-hour chart's RSI, signaling an upward correction may be imminent. Going long with tight stops might be the right choice today.

USD/CHF
There appears to be a leveling-off in the price of this pair as the Bollinger Bands on the hourly chart appears to be tightening, signaling an impending volatile price movement. Most oscillators show a lack of direction, however. Waiting for a clearer signal might be the right choice today.

The Wild Card

Oil
The price of this commodity appears to be floating in the over-sold territory on the RSI of the hourly and daily charts, indicating an upward correction to the recent downward movement may occur later today. The imminent bullish cross on the daily chart supports this notion. As the price of this commodity has discovered a new range to trade in, forex traders can benefit greatly from selling on highs and buying on lows within this price zone.

 

[forexyard]

Forexyard analysis - Falling Crude Oil Prices and Passage of Stimulus Bill May...

Yesterday's drop in Crude Oil prices lent weight to the notion that traders are expecting the consolidating USD to spike in value versus its major currency pairs in the not-too-distant future. The passage of Barack Obama's stimulus bill yesterday may also lend weight to this notion. Today, traders could see the value of the EUR/USD pair drop towards the 1.2800 price level as US Retail Sales and Unemployment Claims provide a level of support to this currency pair.

Economic News

USD - Will Today's Retail Sales Data Drive the USD Higher?

The greenback completed yesterday's trading session with mixed results versus the major currencies. The U.S. Dollar was little changed against the EUR, with the pair closing at the 1.2950 level, but higher against the GBP in a volatile session which saw the pair closing at the 1.43 level. This came amid signs that the U.S. Senate and House of Representatives will be able to bridge their differences on the economic stimulus plan.

The market expressed some optimism for the USD after the U.S Congress and Obama administration reached a deal yesterday on a $789 billion economic stimulus package that would mix tax cuts and new government spending in an effort to rescue the faltering U.S. economy. Analysts now say that the USD is likely to continue to appreciate against the EUR given investors' hopes for a big stimulus package, which might be a slight positive for risk-taking. This is important, as it removes some uncertainty in the U.S economy in contrast to the recent weak economic data coming from the Euro-Zone.

As for today, a batch of data is expected from the U.S. economy. These figures are expected to set the tone for the USD's pairs and crosses. Special attention should be given to the Retail Sales which is expected to increase from previous reading. Traders pay close attention to this figure as it has a strong correlation with the value of the U.S. Dollar. Also today, the weekly Unemployment Claims figure is scheduled and should also have an impact on the market because if it delivers unfavorable figures it will validate a problematic U.S. market, and the USD is likely to weaken slightly as a result.

EUR - German Data Indicates a Weakened Euro-Zone

The EUR finished yesterday's trading session with mixed results versus the major currencies. The 15-nation currency saw gains versus the GBP for most of the day and closed at the 0.8900. Versus the JPY, the Euro-Zone currency was broadly unchanged throughout most of the day, as most of the market movement from yesterday was focused on the USD.

In addition, yesterday was a slow news day in Europe as there was only one economic indicator published. Germany's inflation rate dropped to the lowest level in almost five years in January after the recession deepened and oil prices plunged. The inflation slowdown in Germany, Europe's largest economy, was led by a 15% drop in prices for Crude Oil from a year earlier. In recent months, the Euro-Zone economies are not having much of an impact on the value of their currency. The EUR may in fact be waiting for clear signs of direction from the United States' economy before picking a direction.

Looking ahead to today, the most important financial indicator scheduled to be released from Europe is Industrial Production. Analysts are forecasting this figure to decrease from its previous reading. Traders will be paying close attention to today's Industrial Production announcement as a stronger than expected result may bolster the EUR in the short-term.

JPY - Foreign Influence over the Yen Gaining Strength

The Yen completed yesterday's trading session with mixed results versus the other major currencies. The JPY was broadly unchanged versus the EUR yesterday and closed its trading session at around the 116.00 level. The JPY also saw bullishness against the GBP as it jumped around 100 points and closed at 129.20.

Japan's wholesale inflation dropped for the first time in more than five years as the global recession lowered the cost of oil and commodities. Falling commodity prices and weakening demand for goods kept many firms from hiking prices and even led some to make cuts.

As for today, Japan will be absent from the economic calendar. The JPY's trends will be affected by the rallies of its primary currency pairs. It seems the USD and EUR are expected to continue a volatile trading session today and their crosses with the JPY will likely be as well. Traders should keep a close look on the news coming from the U.S. and Europe as these economies will be the deciding factors in the JPY's movement today, especially U.S. Retail Sales since it has a correlation to Japanese exports.

Oil - Price of Crude Oil Hits One-Month Low

Oil prices slid 4.3% during yesterday's trading session, the lowest in four weeks. This drop came after a U.S. government report showed Crude Oil inventories rose more than expected in the world's top energy consumer, and after the International Energy Agency (IEA) said that global energy demand this year would post its biggest decline since 1982 under the weight of the economic crisis.

Oil prices have dropped significantly in the last few months due to the global economic slowdown and its impact on consumer and business fuel consumption, raising alarms for OPEC members that have agreed to record output cuts to counter this weakness.

Technical News

EUR/USD
This pair continues to build towards a volatile price movement as all oscillators are still showing the price floating in neutral territory. The Bollinger Bands on all charts are still tightening in anticipation of a significant movement as well. With the weekly Momentum oscillator showing mild downward pressure, there is a possibility that the price will go bearish after the breach. Setting short positions with tight stops might be the right choice today.

GBP/USD
The price of this pair appears to be floating in the over-sold territory on the 4-hour chart's RSI, signaling an upward correction in the near future. The recent bullish cross on the 4-hour chart's Slow Stochastic supports this notion. With the Bollinger Bands on the hourly chart tightening, a volatile bullish spike may occur later today. Entering buy positions with tight stops before the breach might be the right strategy today.

USD/JPY
There appears to be an imminent bullish cross on the hourly chart, indicating an upward correction may occur soon. However, the weekly chart's Momentum oscillator shows steep downward pressure. Waiting for the upward correction to peak then setting sell positions might be a wise choice today.

USD/CHF
There appears to be a leveling-off in the price of this pair as all oscillators show the price floating in neutral territory. Even the weekly Momentum oscillator shows almost no direction. Yet, this pair fluctuates within quite a wide trading range of approximately 130 pips. The relatively volatile nature of the recent trend allows traders to open short term positions and to maximize profits by buying on lows and selling on highs.

The Wild Card

Gold
There appears to have been a violent breach of the upper border of the Bollinger Bands on both the hourly and 4-hour charts, signaling moderate downward pressure on the price of this commodity. The price currently floats in the over-bought territory on the 4-hour chart's RSI and a bearish cross has recently formed on this chart's Slow Stochastic, which supports the notion of a downward correction in the near future. Forex traders can benefit from this potential trend reversal by setting early sell positions and riding out the downward movement.

 

[forexyard]

Forexyard analysis - G-7 Takes the Task of Rebuilding the World Economy

The G-7's finance ministers and central bankers meet tonight and tomorrow before releasing a statement and talking to reporters at about 2:30 p.m. local time. On the agenda: How to thwart protectionism, overhaul financial oversight and end what the International Monetary Fund calls a depression in advanced economies.

Economic News

USD - First Good Sign from the U.S Economy

The Dollar continues to safely strengthen against the major currencies, and yesterday the greenback reached a 10-day high against the EUR. For now, it seems that the ongoing reports claiming the U.S government is combating recession, and the wide acceptance of the steps it's taking by financial experts around the world are enough to set free the bullish trend we're witnessing for the past couple of weeks.

As for yesterday, a batch of relatively positive data was delivered, supporting the Dollar's upward trend. The monthly U.S Core Retail Sales rose 0.9% in January, beating forecasts for a 0.5% decline. That piece of information is extremely significant, as this is the first time in 6 months that the monthly value of sales at the retail level (excluding automobiles) was greater than the one in the previous month. In a few months, we all might look back and say that this was the first sign of the rehabilitated U.S economy.

Another important indicator that was released yesterday was the Unemployment Claims. The published figure showed that 623K individuals filed for unemployment insurance for the first time during the past week, and if we said that the Core Retail Sales might be a good sign, this is a very disturbing sign, for sure. It is now the second week in a row that over 600K people are losing there jobs in the U.S, pointing out the well-known fact that the U.S economy is continuously contracting.

As for today, the Preliminary University of Michigan Sentiment survey will be released at 14:55 GMT. This survey is considered to be a primary indicator of consumers' financial confidence, and thus tends to have a large impact on the market. Currently, a 60.6 mark is expected, which is considered to be a positive result, however traders should keep their eyes focus, and look for a possibly change of trend during this time.

EUR - Low Oil Price to Help Euro-Zone Economy - Says Trichet

Yesterday the EUR saw a volatile trading session against the major currency pairs. The EUR climbed against the JPY; however it continued its downtrend against the USD.

The main news from the Euro-Zone yesterday came from Jean-Claude Trichet's speech, in which the European Central Bank President said that that the expansionary impact of relatively low oil prices, and technological progress should come to aid of the Euro-Zone economy. In his speech Trichet expressed his optimism despite of the challenges the economies will face in 2009.
Trichet's speech was probably the leading factor to halt the slide of the EUR/USD at midday, as it was his first hawkish speech in quite a while now. It is safe to say that investors have an endless thirst for such words from the economic leaders, especially in times like now.
Also yesterday, the European Monthly Industrial Production indicator was released. The indicator showed that the total inflation-adjusted value of output has dropped by 2.6% in December as opposed to the previous month. This publication reflected 4 straight months in which this economic indicator is deteriorating, demonstrating how unhealthy the Euro-zone industrial production is currently.

Looking ahead to today, the European Flash Gross Domestic Product (GDP) is expected at 10:00 GMT. This indicator measures the change in the value of all goods and services. Forecasts for this indicator are suggesting that the Euro-zone's GDP has dropped by 1.3% in December, painting quite a gloomy picture of the current financial status. Traders should also stay informed of news released from the G7 Meeting that will be held during the next to days, as any information from that meeting could change the course of the local currencies before the trading week reaches its end.

JPY - Japanese Yen Seems to Be the Best Financial Investment

The JPY underwent an extremely volatile session against all the major currencies. During early trading the JPY dropped against the USD and the EUR, however, later on the trend reversed, and the JPY returned to its previous rates.

It appears that investors are considering the Japanese economy to be the safest one, or at least the most stabile economy to trust their funds in at the moment, as the JPY is gaining strength in a consistent way, in spite of the fact the all the experts are predicting on a daily basis that the JPY is overvalued and that a downtrend is just a matter of time. It should be said that the best currency to go long on, for a few months now is the JPY, and weather you traded it against the USD, the EUR or the GBP, either way you gained profits, and a lot of profits. As long as no clearer signs are proving that the JPY has limited its bullish trend, it will retain its status as one of the best investments in the current economic turbulence.

As for today, no significant data is expected from the Japanese economy, however, the G7 Meeting that will be held during the weekend, is likely to affect the Yen as well. Traders are advised watch closely after any development from the meeting, especially for announcements regarding the Japanese economy.

OIL - Crude Oil Prices Following Equity Markets

Crude Oil prices continue to slide on a permanent basis, and a barrel of Crude Oil was traded for $33.50 yesterday.

Forecasts are assuming that world oil consumption will drop 1.7% to 84.3 million barrels a day this year, and particularly there is a serious concern that oil demand will drop sharply in the U.S. it seems that as long as the U.S economy continues to deteriorate, oil prices will continue to respond in lowering prices. if oil prices were considered to be attached to the USD in the past, it appears that today oil prices are more attached to the Dow Jones than to anything else, and as long as equity markets in the U.S will deliver bearish signs, a barrel of Crude Oil might be values under $30.

As for today, traders are advised to continue following equity markets in the U.S as they seem to be the best tool in order to predict future developments.

Technical News

EUR/USD
This pair is in the midst of a narrowing upward channel and is now floating in the middle of it. The hourlies are showing mixed signals with its RSI floating in neutral territory. However, the Slow Stochastic of the daily chart is showing quite a strong bullish momentum, and the RSI confirms that the direction is indeed up. All indications are that there is more room for further upward movement and the preferable strategy today will be to go long on dips.

GBP/USD
Despite yesterday's sharp drop, the bullish channel on the daily chart is still intact. According to a 4 hour chart, the pair is oversold; therefore a fresh bullish momentum may be quite imminent on the 4 hour chart as well. Going long with tight limits might be a preferable strategy today.

USD/JPY
The pair is still in a bullish configuration and is now floating around 91.00. The momentum on the 4 hour chart is very strong and it appears that there might be a testing the level of 91.60. The Bollinger Bands are tightened on the daily chart implying that volatility will increase during the day; meaning that traders may have a good opportunity to make profits during today's trading session.

USD/CHF
The hourlies are showing that the pair still does not have a distinct direction, as the chart appears to be quite horizontal for the past 2 days. Indicators on the 4 hour and the daily charts are giving mixed signals although there is still a lot of positive momentum. Traders should wait for a clear signal on the hourly level before entering the market today.

The Wild Card

Silver
There is a very accurate bullish channel forming on the daily chart, as the break through the bottom level of it was just validated. Silver now has enough bullish momentum to be carried into the 14.50 zone. This is a great opportunity for forex traders to use this technical break and swing into a high potential upwards move.

 

[forexyard]

Forexyard analysis - The U.S. Currency is bolstered by Optimism

It appears that actions taken by the new administration of President Barack Obama might help to restore confidence among investors in the United Sates economy. U.S. Treasury officials said on Saturday that the U.S. dollar is likely to emerge from recession sooner than expected following massive fiscal stimulus.

Economic News

USD - U.S. Dollar Sees Strong Recovery after Economic Stimulus Bill is Approved

The U.S. Dollar opened this week with a dramatic jump in the right direction. Gaining strength against every major currency, except the JPY, the greenback has been benefiting heavily from the passage of last week's economic stimulus bill, which is due to be signed by President Obama this Tuesday. Closing last week against the EUR at 1.2870, and against the Pound at 1.4358, the USD saw lows this morning around 1.2783 and 1.4251 respectively after market open.

The $787 billion economic stimulus bill passed by both the U.S. Senate and House of Representatives marked a great success for the early period of Barack Obama's administration. The market jumped in excitement from the optimism this legislation brings to the American economy. While not a clear indication that the economy will start to recover immediately, it nevertheless places a degree of confidence behind the notion that it may indeed recover at a later time.

For now, the market focuses its attention to the signing of this bill on Tuesday, followed by the discussion of another bank bailout program to be detailed by various FOMC Chairmen later this week. The important economic figures to watch this week, outside of the layout of various stimulus and bailout plans, is this month's housing data. On Wednesday, the U.S. government will release data on building permits and housing starts during the month of January, and may likely show a continuation to the recent downtrend these figures have seen since last year. Balanced against the stimulus euphoria, these negative figures may not carry as large an impact as usual.


EUR - European GDP Weaker; ECB Remains Conservative on Interest Rates

As Europe's GDP slumps even further, the Euro-Zone currency begins to slide lower against most of the other major currencies. After dropping as low as 1.2720 against the USD late last week, the EUR later rebounded towards levels of 1.2870 by end of trading Friday. However, upon market opening this week, the EUR dropped against the greenback towards a price near 1.2780, signaling a shift back towards general weakness in the Euro-Zone.

Friday's economic data releases on regional GDP indicated a decrease of roughly 1.5% for the combined total economies making up the European Monetary Union (EMU). The European Central Bank (ECB) commented on Saturday that they will remain conservative with interest rate decisions as they would like to maintain a level of flexibility when it comes to a plan of attack which utilizes monetary policy. The trouble comes as analysts begin to forecast that without an aggressive rate cut, the Euro-Zone could enter a severe period of downward-spiraling negative economic output; further weakening the EUR.

Looking ahead, the Euro-Zone is preparing for a quiet news week as Tuesday will see one of the only indicators to be released until Friday's various reports on manufacturing and service sector output. The ZEW Economic Sentiment report from Germany has been inching towards a positive number steadily since July of last year. While expected to remain a negative figure, this report may show that confidence in the German economy has gained lately and may spark a short correction to the EUR's pairs early in the week.

JPY - JPY Largely Unaffected by Largest GDP Drop Seen Since 1974

The Yen saw some relatively moderate appreciation against its currency rivals as this weekend's G7 Summit reaffirmed very little which wasn't already known by world financial chiefs. Failing to comment on the recent strength of the JPY led some to believe that it was a normal turn of events, even expected by the Bank of Japan (BoJ) despite growing concerns over a slouching GDP. The Yen ended last week down against the USD near the 91.90 price level, but has strengthened back towards 91.50 during this week's early trading hours.

Slowing down the pace at which the Japanese economy recovered, however, was the recent release of its preliminary GDP figures which showed a 3.3% decline in the island economy's output, the largest decline since 1974. With a number of economic indicators being released this week, including another round of interest rate talks, the JPY may see a higher-than-normal amount of volatility, especially considering that most indicators are forecast to show further negative levels of economic output. Traders may look for a further weakening of the Yen in the coming days.

OIL - Crude Oil Trades Below $38 on Slowing Global Demand

The price of Crude Oil broke through a number of significant barriers last Friday. Starting the day just above $36 a barrel, the price then cut through the $35 and $34 price barriers before climbing back up $3 higher by market close. This week, the price of Crude appears to be back on the downward slide as the price has already fallen over $0.40 towards the $37 a barrel price range.

The strengthening of the USD from last week's passage of Obama's economic stimulus bill helped push the value of this commodity lower towards the end of the trading week. With more news on the way regarding the signing and implementation of this bill, the USD is likely to appreciate throughout the coming days, putting further downward pressure on the price of Crude Oil. Traders may in fact see the price of Oil drop to as low as $30 a barrel by week's end.

Technical News

EUR/USD
After a long period in which the pair has mainly fluctuated, it seems that we are on the verge of a relatively strong move. The pair has crossed the lower border of the 4 hour chart's Bollinger Bands, indicating that it should enter a downtrend. A breach through the 1.2720 might validate the bearish move with a price target of 1.2690.

GBP/USD
The pair is continuing its bearish development, as the cable dropped almost 300 pips in the past 3 days. All oscillators on the hourly chart are pointing down, indicating that the falling trend has more room to go. Next price target might be 1.4100.

USD/JPY
The bullish momentum continues with full steam as the pair breached the key Fibonacci level of 90.91. Currently, all oscillators on the daily chart are giving bullish signals; hence, going long seems to be preferable.

USD/CHF
It seems that the pair is extending its bullish correction, as it entered an uptrend ever since it tested the 1.1600 level. Currently, all oscillators on the 4 hour chart are pointing up, suggesting further bullish behavior for the pair. Going long might be preferable today.

The Wild Card

EUR/AUD
The 4 hour chart shows both the tightening of the Bollinger Bands, and also a bullish cross on the Slow Stochastic, suggesting that a strong bullish momentum is likely to take place. This might give forex traders an excellent opportunity to enter a promising trend at a very early stage.

 

[forexyard]

Forexyard analysis - Dollar Jumps on Future EUR Interest Rate Moves

The Dollar rallied yesterday on possible Interest Rate cuts in the Euro-Zone while in Japan GDP and an intoxicated Finance Minister helped push the Yen Lower.

Economic News
USD - Dollar Rallies across the Board

A larger than forecasted drop in Japanese GDP curbed traders' risk taking yesterday in the forex market. Also hanging over the market was dissatisfaction with the outcome of the G7 meeting and the passage of the U.S. economic stimulus bill. These market events failed to ignite a rally as traders moved into typical safe-haven currencies.

Risk appetite was curbed yesterday as Japan reminded the world that global growth is indeed slumping. Japanese GDP declined by 3.3%. This was worse than the forecasted number of 3.2% predicted by economists. The flight to safety sent the USD higher against the Yen. The market was also unimpressed with the end of the G7 meeting as the world's finance ministers failed to lend any support to global currencies.

Analysts have been saying higher yielding currencies will get a boost once a turnaround in global economic activity is forecasted. The release of Japanese GDP is a signal that perhaps the worst is yet to come for slowing global economies.

Looking ahead to a brighter story today, the release of the TIC long term purchases is due at 14:00 GMT. The release is forecasted to show an improvement from last month's dramatic drop in asset purchases by foreigners. If the TIC fails to reach its estimated target, look for the USD to depreciate to the 1.2750 level.

EUR - New Interest Rate Cuts are Priced in to the EUR

During Japanese trading hours, the EUR/USD made a significant downward move on a poor financial outlook in Europe and the potential for new Interest Rate cuts in the Euro-Zone. The start of the depreciation was due to concerns that Ireland may potentially default on its sovereign debt. However, much of this downward momentum can be attributed to the currency pair breaking the significant 1.2750 mark. Once this support line was crossed, many traders automatically sold off the EUR, helping to compound its losses. The EUR/USD closed down on the day at 1.2649 against the Dollar.

Also fueling the losses for the EUR is the potential for renewed Interest Rate cuts by the European Central Bank (ECB). It appears the market has priced into the EUR/USD a rate cut by the ECB in their meeting next month. The question is now open as to how much will that rate cut be?

Today we will have the release of the German ZEW Economic Sentiment survey. This month the indicator is expected to improve slightly, though the price momentum of the currency pair is working against it. Look for the pair to continue its slide to the 1.2600 level.

JPY - Japanese GDP Tumbles, Finance Minister Resigns

The Japanese economy has now experienced declining GDP for the third consecutive quarter. GDP for the fourth quarter last year fell 3.3%. Exports also fell a staggering 14%. This helped to send the USD/JPY higher by almost 1% to 92.43.

In an unrelated event, Japanese Finance Minister Shoichi Nakagawa said he will resign from his post. The resignation stems from his unusual behavior at the G7 summit. Some attribute his bizarre behavior at a press conference because he was under the influence of alcohol. This is a serious setback for the Japanese government that has already lost much of the confidence of its citizens to bring the country out of a recession amid the global financial crisis.

Forex traders should be looking forward to Thursday's Overnight Call Rate from the Bank of Japan (BoJ). No change is expected to take place with Japan's Interest Rates, but the speech from the bank's governor could provide insight for the future direction of the Japanese economy.

Oil - Crude Oil Fails to Rally with the Dollar

Coming on the heels of a large rally this past Friday, Crude Oil looked for price direction but could only find itself range trading. The price rally as seen from the impending approval of President Obama's economic stimulus plan was not strong enough to carry over into the new trading week. Surprisingly, today's price rally in the Dollar was also not enough to push Crude Oil higher.

More fundamental data that may hurt Crude Oil is due to be released on Friday as U.S. Crude Oil Inventories will be reported. It is widely expected for the inventories to increase amid the global economic slowdown. The price level of $30 a barrel doesn't seem so unreasonable any more.

Technical News

EUR/USD

The price of this pair appears to be floating in the over-sold territory while the hourly chart's RSI is indicating that an upward correction may be imminent. The upward direction on the 4-hour chart's Momentum oscillator also supports this notion. When the upward breach occurs, going long with tight stops appears to be the preferable strategy.

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 bullish cross forming on the daily chart's Slow Stochastic indicating a bullish correction might take place in the nearest future. In that case, traders are advised to swing in after the breach takes place.

USD/JPY

A bearish cross on hourly chart's Slow Stochastic implies that a downward correction might take place in the nearest time frame. The 4-hour chart's RSI is floating in the over-bought zone, suggesting that the upward trend might be out of steam. Going short with tight stops appears to be the right strategy today.

USD/CHF

The daily chart is showing mixed signals with its Slow Stochastic fluctuating in neutral territory. However, the hourly Chart's RSI is already floating in the over-bought 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

Gold prices rose significantly in the last month and peaked at $959.40 for an ounce. However, the hourly chart's RSI is floating in an over-bought territory suggesting that the recent upward trend is losing steam and a bearish correction is impending. After this correction takes place, there might be a good opportunity for forex traders to join the bearish trend.

 

[jeffsmith]

February 18, 2009

EUR/USD

Support for the day: - The main supporting levels are at 1.2557 and 1.2538, where an alteration is possible. Smash would give 1.2511, where alteration might take place, then follows 1.2480. Smash of the latter would result in 1.2455. If a strapping impulse, we would see 1.2426. Carry-over will give 1.2403.

Resistance for the day: - The main resistance levels are at 1.2622, 1.2656 and 1.2693. Smash would give 1.2732, where an alteration might be possible, then goes 1.2757. Smash of the latter would result in 1.2781. If a strapping impulse, we would see 1.2826. Carry-over will give 1.2863.

USD/JPY

Support for the day: - The main supporting levels are at 91.80, 91.57 and 91.33. Smash would bring 91.11, where an alteration is possible, then 90.98. If a strapping impulse, we would see 90.62. Carry-over would give 90.35.

Resistance for the day: - The main resistance levels are at 92.72, 92.91, 93.16 and 93.48, where an alteration might be possible. Smash would bring 93.60, where also an alteration may happen, then 93.83. If a strapping impulse, we would see 94.06. Carry-over will give 94.25 and 94.46.

DOW JONES INDEX

Support for the day: - The main supporting levels are at 7542.13 and 7513.00, where a holdup and alteration may happen. Smash of the latter will give 7494.50, where an alteration may happen, then follows 7472.43. Be there a strapping impulse, we would see 7436.30. Carry-over will bring 7412.75 and 7385.62.

Resistance for the day: - The main resistance levels are at 7675.46 and 7708.26, where a holdup and alteration might be possible. Smash would bring 7738.20, where an alteration may take place, then follows 7762.50, where a holdup and alteration could also be. Be there a strapping impulse, we would see 7806.46. Carry-over would bring 7830.33 and 7897.40.

 

[forexyard]

Forexyard analysis - U.S. Stimulus Bill Signed into Law; Dollar Strengthens

Following the signing of President Barack Obama's economic stimulus bill yesterday, the USD made modest gains against most of its currency rivals. In expectation of today's housing data, the USD may continue to strengthen unless this news disappoints investor confidence.

Economic News

USD - Greenback Broadly Extends Gains

The Dollar continued to benefit on Tuesday amid heightened worries about the global economy and investors' concern that Euro-Zone banks are highly exposed to financial turmoil in Eastern Europe. The greenback was also pushed higher after President Barack Obama signed a $787 billion stimulus bill into law yesterday. The bill passed both houses of Congress on Friday.

The U.S currency rose 1.4% yesterday to end the day at 1.2595 per EUR after earlier appreciating as high as 1.2564, its highest level since December 4th. Against the Japanese currency, the USD rose 0.8% to 92.44 Yen, not far from a one-month peak at 92.75 hit earlier today.

Although the U.S. economic data has painted a grim picture, with the New York Federal Reserve reporting its manufacturing activity index plunged to a record low this month, analysts say that the Dollar still remains just about the only short-term alternative for investors. It appears that foreign demand returned to U.S. securities in December, supported by ongoing safe-haven buying of Dollar-denominated deposits. As the market focuses on bad news from Eastern Europe, which plays an important role in the weakness of the EUR, and on the slide in Japan's GDP, investors seek the relative safety of the greenback, hence broaden USD gains.

EUR - EUR Falls on Eastern Europe Concern

The Euro-Zone currency was traded near a 10-week low against the Dollar after a credit agency said it may cut the ratings of several banks with units in Eastern Europe, adding to concern that financial turmoil will deepen. The agency stated that the combination of higher provisions for bad debt, the rise in bank borrowing costs, and falling currencies, would weigh on the profitability of the banks concerned and erode their capital base. As a result, the EUR is likely to further extend its losses versus the greenback and the Yen on speculation the currency will fall on renewed concerns about credit markets, making the U.S. and Japanese currencies more attractive as havens.

The EUR was traded at 1.2579 from 1.2582 late in New York yesterday. It also was down at 116.31 Yen from 116.27. The European currency was also lowered 1.3% against the British pound to 88.45 pence per EUR yesterday after the Office for National Statistics said inflation slowed last month, prompting analyst speculation that the Bank of England (BoE) will reduce the pace of Interest Rate cuts.

Analysts now say that the main reason for the EUR weakness is from worry not only about the European regional economy but specifically those in Eastern Europe where currencies are falling rapidly across the board. The EUR was also under pressure on growing expectations that the European Central Bank (ECB) will ultimately have to play catch up on rate cuts made by the Federal Reserve and Bank of England. Market players anticipate Euro-Zone Interest Rates to fall below 1.0% later this year, with a cut to a record low of 1.5% in March.

JPY - Japanese GDP Data Increases Recession Fears

Japan's economy, only months ago, forecast to be the best performing among the world's most advanced nations, has now become the worst. Gross Domestic Product (GDP) shrunk an annualized 12.7% last quarter, the Cabinet Office said yesterday. Japan's government is struggling to cope with the economic crisis, and may expand its stimulus plans by 20 trillion Yen to 30 trillion Yen to fund a supplementary budget for the fiscal year starting April 1, 2009. The second blight on the Japanese economy is the surge in the Yen currency. The JPY has climbed 17% in the past year; in today's trading the currency was at 92.44 per USD.

As the global financial crisis deepened, investors reduced their carry trades, where they borrowed in low-yielding currencies to invest in nations where interest rates exceeded Japan's. Investors' focus is on whether the Bank of Japan (BOJ) will come out with specific policies to lower term rates. The BOJ has already cut its benchmark Rate to 0.1%, from 0.5% in October, in a bid to help spur the faltering economy. According to several analysts the BOJ policy-makers will likely keep borrowing costs unchanged on February 19th, leading the JPY to continue with its recent trends.

Oil - OPEC to Discuss Production Cuts; Oil Demand Falling

The Organization of the Petroleum Exporting Countries (OPEC) is looking to reduce oil supply further if demand is insufficient to absorb supplies, oil ministers said on Tuesday. OPEC, supplier of more than a third of the world's oil, has raced to cut supply to match falling demand from a slowing global economy. OPEC next meets in March to discuss supply. Crude Oil Prices have fallen by more than $110 from the peak seen last July's to now trade at $38 a barrel on Tuesday. Oil has mostly traded in a $35 to $45 range since December.

Analysts say that the economic outlook will continue to dominate the first half of 2009. The United States, Euro-Zone and Japan are all in synchronized recession, which is depressing fuel demand and sending Crude Oil prices down sharply from its record highs. Traders should watch for U.S. crude oil inventories data to be released by the American Petroleum Institute later on Wednesday and by the U.S. Energy Information Administration on Thursday. These will give an indication to the reserves held by large energy consumers like the United States.

Technical News

EUR/USD
A bullish cross appears to have just taken place on the 4-hour chart's Slow Stochastic, signaling an imminent bullish correction to the recent downward trend. The price also appears to be floating in the over-sold territory on the 4-hour chart's RSI which also lends support to this notion. Going long with tight stops might be the right choice today.

GBP/USD
The Bollinger Bands on the hourly chart are tightening, signaling an imminent volatile price movement. With the recent bullish cross on the daily chart's Slow Stochastic, the imminent movement will likely be in an upwards direction. Going long with tight stops might be the preferable strategy today.

USD/JPY
After yesterday's volatile price movements, this pair appears to have temporarily calmed down. The price appears to be floating in neutral territory on most oscillators and momentum appears to be showing a flat price movement. Waiting for a clearer signal might be the right choice today.

USD/CHF
The price of this pair appears to be floating in the over-sold territory on the hourly chart's RSI, signaling an upward movement may occur in the near future. This pair, however, appears to be trading in a bullish channel. Traders can benefit by buying on the lows and selling on the highs of this up-trend.

The Wild Card

Silver
Silver has been trading in a steady bullish channel for the past few weeks with clear peaks and troughs. Following this commodity's recent upward movement, traders can now see the price hovering in the over-bought territory on the 4-hour and daily charts' RSI, combined with bearish crosses on their Slow Stochastic oscillators as well, all signaling the impending downward correction. Forex traders can benefit from this style of range trading by buying on lows and selling on highs as the price of Silver holds steady on this path.

 

[forexyard]

Forexyard analysis - Dollar Rises on Fed Statement while JPY Continues its Bearish...

The U.S. Dollar is increasingly being chosen over the Yen as the choice currency during times of heightened risk aversion. The contracting global economy helped to strengthen the Dollar yesterday as the Yen begins to lose favor as a safe haven currency.

Economic News

USD - Dollar Jumps on Safe Haven Trading

After a relatively negative news day, the USD still managed to appreciate against most of its currency counterparts. Analysts have declared a decreased risk appetite and market uncertainty as the culprits. The loss of risk appetite means that most traders are waiting for more steady market conditions before taking a position in higher yielding currencies. There is too much uncertainty right now with the various bailout plans. This factor has produced the recent "wait and see" attitude in the forex market. On top of that, we have negative figures such as yesterday's Building Permits, which also adversely affect the market.


The price contraction has brought new fears after the cheapening of Oil and other raw materials because it could trigger deflation. In yesterday's FOMC Meeting Minutes, Fed officials said that they lack the ability to counteract a deflationary spiral because Interest Rates are already too low. Deflation is considered for many as a danger to the economy. The resulting fall in prices may lead to consumers and businesses holding off on further purchases in expectations of even lower prices, sending the economy down a dangerous path. In addition, the Fed also pointed during its meeting that the committee held its Interest Rate near zero to prevent further damage to the already weak economy


USD trading will be interesting today as another batch of important economic data is expected to be released. Similar to yesterday, the news will start at 13:30 GMT with a series of economic indicators being released starting with PPI figures, unemployment claims and the Philly Fed Manufacturing Index. Surprisingly, almost all of these releases are expected to be higher than their previous figures meaning the USD could continue to show further bullishness today. Traders should stay close to the market today, as there is a strong chance to capitalize on the fluctuations which will likely follow these releases.

EUR - EUR Suffers from European Banking Woes

The EUR saw very little change in its overall value against the other currencies yesterday. While continuing with its recent downward trend, it has managed to remain rather calm in light of recent news from the Euro-Zone market. The EUR fell against the USD for a fourth day as the pair closed at 1.2500 levels. The 15 nation currency experienced similar behavior against the GBP as the pair dropped from 0.8920 to 0.8810 by days end.


Western European banks may be more severely hurt by an economic slowdown in Eastern Europe. These banks have lent to companies in Eastern Europe, investments that were sound as Eastern Europe's economy grew at robust rates during the boom period of 2003-2005. But now recessions in these nations will threaten debt service capabilities, hurting Western Europe's banks, which will weigh on the EUR and GBP


There will only be one data release from EZ today as the Italian Trade Balance will be announced during early trading. This indicator tends to have a relatively small impact on the market. A rising trend will have a positive effect on the nation's currency. In addition, traders should pay close attention to the response of equity market to determine how to continue with EUR positions.

JPY - JPY Corrects as the Currency Falls out of Favor with Traders

The Yen continued to depreciate as investors are choosing the Dollar over the Yen for a safe haven trade. The JPY fell against the USD and closed around 93.65. Moreover; the Japanese Yen lost almost 150 pips versus the EUR, closing at 117.70 and just around 200 pips versus the GBP.


The world's second-largest economy shrank at the steepest pace since the 1974 oil shock last quarter as a global slowdown triggered record declines in exports and output. Gross domestics' product dropped an annualized 12.7% last quarter, more than twice as fast as declines in the U.S. and Europe. The economy may suffer a bigger contraction in the current quarter, which could weigh on the JPY.


Looking ahead today, the Japanese market should have a heavy effect on the JPY versus its major currency counterparts, as the Overnight Call Rate will be announced today The rate is expect to remain unchanged but traders should pay close attention to the BoJ Press Conference that will follow to look for expectations of Japan's economic future. Later tonight, the monthly All Industries Activity Index is expected to be released with a negative figure. This should add bearish momentum to the Yen against its counterparts. If Crude Oil prices change drastically following the Crude Oil Inventories release, expect some more volatility on the JPY.

OIL - Crude Oil Traders Await U.S. Inventory Data

Crude Oil prices experienced another day of depreciation as the oft-traded commodity dropped below $38 in this morning's early trading session. Oil prices traded down for the second straight day. Much of the bearish movement in Crude Oil can be attributed to fears of a drop in fuel consumption due to poor economic outlook in the major world economies.


With economic growth slowing in the U.S. and Europe, and another month of falling service industry numbers, Crude Oil may continue to see a depreciating value. As for today, the U.S. Crude Oil inventories figures will be released. Expectations show a drop to 2.9M from last week's excessive 4.7M. Traders can, and should, expect wide market volatility around the 14:00 GMT release of these inventories figures because of Crude Oil's recent drop below the $40 price level.

Technical News

EUR/USD
There appears to be a bullish cross forming on the daily chart's Slow Stochastic, indicating that an upward correction is expected in the near future. However, almost all other oscillators are stuck in neutral territory, signaling that this pair may be less volatile than expected. Going long with tight stops might be the right strategy today.

GBP/USD
A bearish cross on the 4-hour chart is forming, signaling a potential price drop, while the Bollinger Bands are also tightening, pointing to an imminent volatile price movement. However, the daily chart's Slow Stochastic indicates a recent bullish cross, signaling a possible upward movement. In the short-term traders may expect a downward correction, but longer-term traders may want to maintain their long positions today.

USD/JPY
The price of this pair appears to be floating in the over-bought territory on the 4-hour chart's RSI and there appears to be an imminent bearish cross on the Slow Stochastic, indicating a downward correction may occur soon. The price also appears to be floating in the over-bought territory on the daily chart's RSI which also lends support to this notion. Going short might be the right choice today.

USD/CHF
The pair has been range-trading for a while now with no specific direction. The daily chart's Slow Stochastic is providing us with mixed signals, however it's Bollinger Bands are tightening, implying that a violent breach may take place. Until that will happen, 4 hour chart reflects quite a stable fluctuation within a flat channel thus providing traders a chance to make profits from buying on dips and selling on lows.

The Wild Card

Gold

This commodity has been trying to massively correct the intensive bullish move, and is now trading around the 977 level. The sharp bearish channel is in a high spot at the moment and together with a bearish cross of the 4 hour chart's Slow Stochastic it provides forex investors quite a good potential for short positions.

 

[forexyard]

Forexyard analysis- Dollar Plunges and then Reverses Full Steam on Huge Equity Losses

The EUR/USD saw extremely high price volatility yesterday. When the pair reached its intra day high which coincided with the opening the New York trading session, it depreciated to its opening price for the day. Driving the appreciation for the Dollar was heavy losses in U.S. equity markets.

Economic News

USD - Dollar Volatility continues as Dow Hits 6-Year Low

The Dollar recorded another day of volatile trading on Thursday, as the U.S. equity market took a beating. The Dow Jones Industrial Average reached a six year low yesterday. One of the main reasons for this was the U.S. banking shares hitting a 17 year low. The shares of banks, such as Bank of America and Citigroup slid by 14% respectively. Equity markets can be used to measure the amount of risk in currency markets. This was reflected in yesterday's trading of the USD.


Throughout the Japanese and European trading sessions, the EUR/USD steadily appreciated, touching on a high of 1.2759. But as the New York markets opened, the pair began a sharp reversal, ending the day near close to its opening level of 1.2591.


The Dollar also closed up vs. the Pound from 1.4269 to 1.4214. Britain's currency is still very sensitive to developments in the U.S. This was also helped by a recorded swell in Britain's money supply earlier today, and an increase in the U.S. PPI. Both of these therefore helped support the greenback. Against the JPY, the Dollar rose over 65 pips to close at 94.10 as investors continue to back the greenback's safe-haven status vs. the JPY.


Traders are advised to pay close attention to Core U.S. CPI figures that are set to be published at 13:30 later today. The results of this may help keep the Dollar's strength going into next week's trading. It is also advisable to follow how Obama's meeting with President Harper of Canada is displayed in the media prior to the opening of U.S. markets. The reason why this is important is because Obama spoke about his opposition of protectionism, contradicting his campaign remarks. Therefore, the Dollar may go bullish as investors realize he is even more of a capitalist than his Republican predecessor.

EUR - EUR Recovers from 3-Month Low against Dollar, then Reverses

The European currency made bullish gains against its major currency pairs in yesterdays trading. The most notable event in EUR trading was the European currency's recovery against the USD as it hit a 3-month low in Wednesday's trading. The EUR's strength in early Thursday's trading was owed to a number of factors, including German Finance Minister Peter Steinbruck tough rhetoric that Germany would back emergency measures to prevent the Euro-Zone economic situation from deteriorating further.


The EUR rose significantly but then reversed by nearly 160 pips against the USD to close at 1.2591. This was also helped by the Dow and U.S. banking stocks hitting lows not seen in over 6 years. The Pound lost over 60 pips against the EUR in yesterday's trading to close at the 0.8858 mark. Some of this may be owed to Britain's sensitivity to America's weak banking sector. Against the JPY, the EUR rose by nearly 100 pips to close at 118.52. This comes about as Japanese equities declined and Japanese exporters reported that they may be shipping jobs abroad.


Today, there are many news events coming out of the Euro-Zone and Britain. From the Euro-Zone, investors are advised to follow the release of the Flash Services PMI and the Flash Manufacturing PMI figures set to be released at 9.00 GMT. Britain is set to release Retail Sales figures at 9.30 GMT. The results of these data releases may set the pace for the EUR and Pound going into the beginning of next week's trading.

JPY - JPY Safe-Haven Status Comes under Threat

The JPY's safe-haven status came under threat again yesterday, as Japan's economy has become increasingly volatile to the global recession. Japanese equities slid yesterday as exporters reported more bad news owing to the strong Yen. Japanese carmaker Nissan said that it may export 130,000 jobs to Mexico. Additionally, the Yen also reacted negatively to the U.S. Stock Market dive, leading the Nikkei to dive 1.2% too. In the last few days of trading the Dollar has made some big gains against the JPY. This is mainly due to the fact that investors and forex traders are of the view that the Dollar will be the number 1 safe-haven currency during the current global recession.


The JPY dived against the Dollar by 60 pips to close at 94.10. The Yen lost over 100 pips vs. the EUR, marking its second straight loss against the European currency. Against the GBP, the JPY lost over 60 pips to close at 133.97. There is a possibility that the Yen's behavior against its major currency counterparts in recent days may be partly owed to a correction in the value of the Yen. Therefore, this may not be as bad as it first seems. If things continue like this, however, then the Yen may help Japan's economy recover quicker out of recession. Today, forex traders are advised to follow events coming out of Japan, the Euro-Zone, and the U.S., as these may help set a price level for the Yen against its major currency crosses going into the middle of next week.

OIL - Crude Oil Spikes on Better Inventory Data

Oil prices went to as high as $40.23 in yesterdays trading. However, by the close of trading the black gold was trading near $39.466, holding gains of nearly $2 from Wednesday's closes. One of the main factors contributing to Oil's gains was the U.S. Crude Oil Inventories Data. Crude stocks declined by 0.2 million barrels last week. Analysts had forecasted a rise in inventories by 2.9 billion. The other 2 factors that may have played in to Crude's strength on Thursday were the Dollar's weakness in early trading and a possible price correction in the black gold.


Crude prices may extend their gains today as investors may perhaps pursue take profits. This volatility of Oil in today's trading is strongly dependent on Euro-Zone and U.S. data releases. Also, Crude may go bullish if investors feel that President Obama can handle the complex U.S. recession. The highest that Oil prices could reach by the end of today's trading may be $41.00. If prices do hit this mark, they are likely to drop very quickly below $39 a barrel, as there is not enough confidence and physical demand to uphold this price level.

Technical News

EUR/USD
The Daily chart's showing that the pair is still in bearish configuration. However, a bullish cross on hourly chart's Slow Stochastic implies that an upwards correction might take place in the nearest time frame. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

GBP/USD
Narrow range trading continues as the pair did not make a significant move in either direction, and is currently traded around the 1.4220 level. The hourly chart's Slow Stochastic is showing a fresh bullish cross suggesting that upwards correction might take place in the nearest time frame. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

USD/JPY
The bullish trend is loosing its steam and the pair seems to consolidate around the 94.15 level. The daily chart's RSI is already floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. Going short with tight stops appears to be preferable strategy.

USD/CHF
The hourly 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
Gold prices rose significantly in the last month and peaked at $975 for an ounce. However, 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.

 

[forexyard]

Forexyard analysis - Will the USD be Hurt by Falling Consumer Confidence?

With stocks dropping to record lows, currencies fluctuating in irregular patterns, and the price of Crude Oil continuing its free fall, it seems unlikely that consumer confidence will begin to rise in the near future. With the CB Consumer Confidence Report expected later today, traders should anticipate a negative release and price this in to the value of the USD.

Economic News

USD - Dollar Rises as Wall Street Tumbles

The Dollar rose against its main currency pairs in yesterday's trading while Wall Street recorded some big losses. The Dow Jones dived by a massive 250 points, reaching a 12-year low. This came about after federal authorities released information about the possibility of taking stakes in top U.S. banks. It is important to note that bank shares, such as those of Citigroup and Bank of America, increased as Barack Obama reassured investors that banks will remain in private hands.

The USD made large gains against the EUR as it climbed about 185 points versus the European currency to close at 1.2724. Against the JPY, the USD gained about 200 points to finish trading at 94.96. The USD, however, lost 31 points against the GBP to close at 1.4547.

One reason for the Dollar's gains was due to investors viewing the currency as a safe-haven. This is likely to continue in the coming months as the recession continues to destabilize the global economy. The JPY and EUR weakness against the Dollar yesterday can be explained by pointing to negative data coming from these 2 regional markets. Also, the JPY is starting to be considered as less of a safe-haven than the USD. Furthermore, European Central Bank (ECB) President Jean-Claude Trichet spoke about the intensification and severity of the recession as it hit all sectors of the Euro-Zone economy in recent weeks.

Looking ahead to today, the 2 main news events coming out of the U.S. are the release of U.S. CB Consumer Confidence figures. This will be important in determining the Dollar's value later in today's trading. It is important to take into account, as we have seen of late, even if the news from the U.S. is negative, it may even help lead to Dollar bullishness as investors continue to seek the safe-haven U.S. currency in the current recession.

EUR - European Currency Declines on Deepening Recession

The EUR declined as fears about an accelerating recession in the Euro-Zone took its toll in Monday's trading. The EUR recorded losses against most of its currency pairs, which was also compounded by Wall Street's record drop yesterday. The European currency's trading in recent weeks has been increasingly volatile, as the economic situation continues to dampen the Euro-Zone economy.

The main factor leading to a bearish EUR yesterday was European Central Bank (ECB) President Jean-Claude Trichet detailing more how hard-hit the Euro-Zone has been since the start of the recession, indicating that the ECB is likely to cut Interest Rates further in March. The EUR fell by a staggering 140 points against the GBP to 0.8739. The EUR/USD pair finished yesterday's trading down by nearly 185 points at 1.2724. However, against the JPY, the EUR closed up 90 points at 120.85.

Today, there will be a lot of news coming out of the Euro-Zone. The German Ifo Business Climate and Current Account figures are expected to be released at 9:00 GMT. Better-than-expected results may lead to a bullish EUR through the end of today's trading sessions.

JPY - Yen Declines against Dollar and EUR

The Yen recorded losses against all of its major currency crosses in yesterdays trading. This came about for several reasons. Primarily among them is that Japan's economy continues to decline at an alarming rate as the global recession continues to take its toll. The Yen declined by 200 points against the USD to finish Monday's trading at 94.96. Against the EUR it also lost 90 points to close at 120.85.

A few economic data releases are expected to be released from Japan later today. At 23:50 GMT there is the release of Japanese Trade Balance figures. This is likely to have an impact on the JPY in late trading. However, before this release there is likely to be a lot of action in the currency market. This is likely to be led by political and economic developments coming out of the U.S., Britain, and the Euro-Zone. If things continue in the same pattern for the JPY, then the USD/JPY currency cross may exceed 96.00 in tomorrow's trading. Additionally, if Japan shows more negative economic data in the coming week, then it is likely to sink to new lows against its major currency pairs.

Oil - Oil Tumbles on Falling Demand

The price of Crude Oil tumbled $2.31 to $38.01 a barrel in yesterday's trading, as OPEC foresaw demand falling faster than the cartel's production cuts. OPEC has cut its oil production by several million barrels a day since September, and is expected to cut further when they meet again in March. One of the main issues that is affecting Oil's volatility is the U.S. economy. It seems that the only way for Oil to make a mini-recovery is if the U.S. shows that it is resilient when it comes to the recession. However, facts on the ground seem to contradict this.

With over 500,000 Americans losing their jobs each month, the collapsing car industry, and with the closure of factories in the U.S., it seems unlikely that Oil prices will recover at all, at least in the next few weeks. This is increasingly valid as Japan, China, and the Euro-Zone are also increasingly feeling the heat of the global recession. It seems that only daily U.S. stockpile increases or a string of positive economic figures coming out of the U.S. may push-up Oil prices in the short-term. In the long-term, traders should look for a continuance of this steady price depreciation.

Technical News

EUR/USD
A bullish cross appears to be imminent on the 4-hour chart's Slow Stochastic, signaling a bullish correction may take place shortly. However, a bearish cross may be forming on the hourly chart's Slow Stochastic, indicating the opposite. Weekly momentum appears to be leveling which means the pair may lack direction at the moment. Waiting for a clearer signal might be the right choice today.

GBP/USD
It appears a bearish cross is imminent on the hourly chart's Slow Stochastic, indicating a downward correction may occur soon. As the price begins to approach the over-bought territory on the 4-hour chart's RSI, the downward correction becomes more imminent. Going short with tight stops might be the right choice today.

USD/JPY
This pair has recently entered a sustained upward trend. With the Slow Stochastic on the 4-hour chart indicating a bearish cross has recently formed, and the hourly chart's Slow Stochastic signaling that one may be imminent, a downward correction may indeed be occurring in the near future. Going short with tight stops might be the preferable strategy today.

USD/CHF
After last Friday's significant drop, the pair now appears to be in a steady uptrend. With the recent bearish cross on the 4-hour chart's Slow Stochastic, a downward correction may be imminent. However, most other oscillators show a lack of direction. Waiting for the correction to finish its course then buying on lows may be the right strategy today.

The Wild Card

Oil
The price of this commodity appears to be floating in the over-sold territory on the hourly chart's RSI, signaling an upward correction may take place later today. There appears to be a bullish cross forming on the 4-hour chart's Slow Stochastic as well, which supports this notion. Forex traders should wait for a leveling off in the price of this commodity then anticipate the upward correction to earn large profits during this imminent price movement.

 

[forexyard]

Forexyard Analysis - USD Stabilizes as Obama Proclaims America Will Recover

Addressing Congress yesterday, President Barack Obama made an effort to boost confidence in the economy by stating that America could recover and emerge from this crisis stronger than ever. His recent stimulus plan, he says, is meant to preserve or create at least 3 million jobs and increase infrastructure spending, but the amount of stimulus money will likely need to be increased in the near future. Meanwhile, the USD has been stabilizing as a result of positive news, and the anticipation of even better news expected today from the housing sector.

Economic News

USD - Dollar Fundamentals May Generate High Volatility Today

The greenback completed yesterday's trading session with mixed results versus the major currencies. The USD fell against the EUR yesterday, pushing the oft-traded currency pair to 1.2866. The dollar experienced similar behavior against the CHF as the pair dropped from 116.70 to 115.80 by day's end. The USD did see some bullishness as well as it gained over 150 points against the JPY and closed at 96.70.

The most influential economic data coming from the U.S. yesterday was the consumer confidence report. Consumer confidence hit a record low in February as Americans feared an already deep recession was likely to get even worse. The impact of the financial crisis over the last several months has clearly taken a toll on consumer confidence. In assessing current conditions, consumers rated the labor market and business conditions much less favorably. President Barack Obama is trying to mend the breach in confidence with a stimulus plan that he says will save or create more than 3 million jobs, cut taxes and boost infrastructure spending.

USD trading will be interesting today as a number of important economic data is expected to be released. Similar to yesterday, the news will start at 15:00 GMT with a series of economic indicators being released starting with Existing Home Sales and Crude Oil Inventories. Surprisingly, almost all of these releases are expected to be higher than their previous figures meaning the USD could show relatively high levels of bullishness today. Traders should stay close to the market as there is a strong chance to capitalize on the fluctuations which will likely follow these releases.

EUR - EUR Strengthening from Global Economic Weakness

The EUR experienced a bullish trading session yesterday, as it appreciated against most of its major currency pairs. The EUR gained about 150 points versus the USD during yesterday's trading session, and closed at 1.2866.

German business confidence slipped in February, with a grim economic situation weighing on sentiment even as a government stimulus plan helped invigorate firms' outlook for the future. The Ifo institute's monthly index declined to 82.6 points in February from 83 last month. This wiped out the slight gain made in January, which followed seven consecutive months of decline and defied economists' predictions that the index would remain static or rise slightly.

Germany's economy, Europe's biggest, went into recession last fall as the global economic crisis sapped demand for its exports. The recession deepened in the fourth quarter, when the economy shrank by 2.1%.

Looking ahead to today, the most important financial indicator scheduled to be released from Europe is Germany's Final GDP. Analysts are forecasting this figure to be unchanged from its previous reading. Traders will be paying close attention to today's announcement, as a stronger than expected result may continue to bolster the EUR.

JPY - Japanese Economy Faces Severe Depression

The Japanese Yen saw a bearish trading session yesterday, losing ground against all of its currency crosses. The JPY fell against the USD after several days of recovery, while the EUR/JPY cross also rose to around 1.2443. The only economic events out of Japan yesterday was Trade balance; a little changed from forecasts as volatility was kept to a minimum

Japan's exports plunged by a record in January, as recessions in the U.S. and Europe smothered demand for the country's cars. The government has been unable to pass a stimulus package that could help encourage domestic spending in the absence of export demand. Prime Minister Taro Aso is struggling to get approval from the opposition-led upper house to spend 10 trillion yen to aid companies and households, whose sentiment is near a record low.

There are no economic data releases expected from Japanese economy today; however there will be a nice amount of data from the U.S, which will affect the Yen's major counterparts. Traders might look for further bearishness for the JPY.

Oil - OPEC Producers asked to Lower Crude Oil Output

Crude Oil prices rose again yesterday as the U.S. stock market advanced, signaling that fuel usage in the world's biggest energy-consuming country may rebound. Moreover, the Organization of Petroleum Exporting Countries (OPEC) may begin to cut output by 3.8% a day in February in order to stabilize prices.

However, traders should be eyeing news of key U.S. economic indicators, including a government report on Crude Oil Inventories due today. Worries that weakened international economic growth will depress Oil demand remains a key dampening influence on Oil prices. If the global economic condition deteriorates more aggressively, Crude Oil prices may extend their decline faster than expected.

Technical News

EUR/USD
A pennant formation appears to be forming on the 4-hour and daily charts, signifying that a continuation of the recent uptrend may occur and push this pair higher in the near future. The weekly Momentum oscillator also shows the direction of this pair has begun to change course. Waiting for the breach and then placing long positions might be a wise strategy.

GBP/USD
The price appears to have just entered the over-bought territory on the hourly chart's RSI, indicating a downward correction may occur shortly. The Bollinger Bands on the daily chart also appear to be tightening in anticipation of an impending volatile price movement. Going short with tight stops might be the right choice today.

USD/JPY
The price of this pair currently floats in the over-bought territory on the RSI of the 4-hour and daily charts, signaling strong downward pressure. A bearish cross appears to have just formed on the 4-hour chart's Slow Stochastic as well, supporting the notion that a downward correction is imminent. Going short might be the right choice today.

USD/CHF
This pair appears to be consolidating at the 1.1620 price level and is expected to make a breach in the near future. With recent indications of downward pressure, this pair may turn the corner in the near future and enter a downward correction. Going short with tight stops appears to be the right choice today.

The Wild Card

GBP/JPY
The price of this pair appears to be floating in the over-bought territory on the 4-hour chart's RSI, signaling a downward correction may take place soon. The recent bearish cross on the 4-hour chart's Slow Stochastic supports this notion. With a bearish cross beginning to form on the daily chart's Slow Stochastic, forex traders may be confident with the idea that a downward correction is imminent and capture profits by entering short positions now and riding out the impending movement.

 

[forexyard]

Forexyard Analysis - USD Safe-Haven Gains on Negative Housing Data

Despite forecasts for a depreciation of the Dollar, many economists are now saying that the negative housing data released from the United States yesterday may actually bolster the USD. These contradictory claims are a result of the recent economic recession which has many investors going against forecasts in exchange for a safer investment. The USD appears to be the safest investment, as traders are moving en masse to buy into the greenback.

Economic News

USD - USD/JPY Climbs Back to November 2008 Prices

The greenback was traded near the highest level against the Japanese Yen since November. This came about from speculation that the U.S. durable goods report may show a decreasing figure, adding to the drop in home sales which boosted the currency's appeal as a refuge from the global slump. Analysts expect the Dollar to remain the safe-haven currency of choice in the coming days, as investors are still concerned about the global economic outlook.

The USD traded at 97.53 Yen from 97.39 Yen late in yesterday's New York trading hours. Against the EUR, the USD was at 1.2716, from 1.2723 yesterday, losing some of its momentum against its primary currency rival.

Contrary to forecasts, the greenback may rise against the EUR and GBP after an unexpected reduction in last month's U.S. Existing Home Sales report led to an appreciation of the nation's currency. The National Association of Realtors reported yesterday that purchases of existing homes in the U.S. fell 5.3% in January to an annual figure of 4.49 million, the lowest level since 1997! Apparently, the negative housing data has triggered more USD buying, especially against the EUR, keeping the U.S currency in demand as the safe-haven depended on during this global economic uncertainty and risk aversion.

However, any optimism that the global economy could be recovering might prompt investors to sell the Dollar and buy riskier assets and currencies. Several market players expect the USD to fall sharply once demand for Treasury and agency debt eases and the U.S. current account deficit swells. Once this happens, traders will start investing in other regions, such as Europe.

EUR - GBP Drops on Signs the British Recession is Deepening

The Euro-Zone currency fell more than 1% against the Dollar on Tuesday after European Central Bank (ECB) President Jean-Claude Trichet stated that the financial system was under severe strain, hampering an economic recovery. The economies which make up the Euro-Zone contracted by the most in at least 13 years, pushing the region into a deeper recession. The German economy also contracted the most in 22 years, a government report showed today.

The British Pound dropped against the USD and EUR fueling speculation that the Bank of England (BoE) will likely cut Interest Rates next week. The GBP weakened 1.7% to 1.4238 against the USD. Against the EUR, the Pound depreciated 0.9% to 0.8953. The Pound also slipped from the highest level in almost three months versus the Japanese yen as the Office for National Statistics said Gross Domestic Product (GDP) contracted the most since 1980!

The Pound extended losses after one of the BoE's policy-makers, David Blanchflower, stated that Britain's recession may intensify significantly in the coming months. Analysts say that the underlying fundamentals remain weak and that is having a short-term impact on the Sterling. The BoE meets to decide its Interest Rates next week. Policy-makers already cut the benchmark rate to 1%, a record low, and signaled they're willing to create money to help stimulate the U.K economy, which will likely drive the value of the GBP lower in the short-term.

JPY - Yen Declines as Japanese Economy Gets Worse

Japan's currency slid to a 3-month low against the USD after Japan's trade deficit widened the most in more than two decades, denting its allure as a refuge from the financial crisis. It also weakened versus the EUR after the government said exports tumbled 46% in January, signaling the slump in the world's second largest economy is deepening. It depreciated to 124.43 per EUR, the lowest level since Jan. 9th. Against the Dollar, the Yen continued to drop to 97.75, the weakest level since Nov. 11th.

The Japanese economy's contraction last quarter was the worst since 1974 and analysts predict the slump may drag into the next fiscal year. Output may shrink a record 4% starting April 1st, according to some economists. Bank of Japan (BoJ) officials said last week that the economy will remain in a severe state next quarter and companies will struggle to obtain financing as investors shun risk. The bank, which lowered the key overnight lending rate to 0.10% in December, last week said it will buy corporate bonds for the first time in order to stem the credit squeeze.

Oil - Crude Oil Rises Above $42.50 a Barrel

Crude Oil climbed 6% to above $42 a barrel on Wednesday, after a U.S. government report showed a sharp drop in gasoline inventories in the world's top energy consumer. The U.S. Energy Information Administration (EIA) reported a 1.7% rise in demand for fuel over the four weeks prior to February 20th. Further support for Oil prices came from reports this week of high compliance by members of the Organization of the Petroleum Exporting Countries (OPEC) with deep production cuts agreed last year to stem the slide in oil prices. The 11 OPEC members with quotas, excluding Iraq, reduced output by 3.8% to 25.3 million barrels a day in February.

The rise in Crude prices came despite a drop in the equities markets, with European shares hitting a new 6-year low. U.S. stocks fell after U.S. President Barack Obama's first address to Congress shed little new light on how he plans to stabilize the U.S economy and shore up banks. Analysts expect that Crude Oil prices will probably start rising in the second half of the year as a drop in demand starts leveling off and OPEC cuts supply further.

Technical News

EUR/USD
Yesterday's pennant formation apparently has not finished its development as the pair continues to consolidate towards the 1.2800 price level before making a significant breach. For the time being this pair continues to float between a distinct price-range. Buying on the lows and selling on the highs in this range appears to be a wise strategy today.

GBP/USD
There appears to be a bullish cross on the 4-hour chart's Slow Stochastic, signaling an imminent upward correction to the down-trend seen throughout this week. With the weekly Momentum oscillator shifting into a sharp upward direction, it appears this pair may be due for a trend reversal. Going long with tight stops might be a good strategy today.

USD/JPY
The price of this pair appears to be floating in the over-bought territory on the RSI oscillators of both the 4-hour and daily charts, indicating a downward correction may occur in the near future. With a bearish cross forming on the daily chart, this downward move may take place later today. Going short with tight stops might be a wise choice.

USD/CHF
After two violent breaches of the upper border on the hourly chart's Bollinger Bands late yesterday, this pair now appears to be settling down into a more neutral position. However, the Bollinger Bands on the daily chart are beginning to tighten, indicating that another violent movement may occur in the near future. Traders may want to wait for the breach then swing.

The Wild Card

EUR/JPY
For the past two days this pair has been trading in a very solid range, with distinct highs and lows. However, the 4-hour and daily chart are beginning to signal that this pair is due for a downward correction. The price appears to be floating in the over-bought territory on the RSI of both charts; and, the daily chart indicates that yesterday's trading ended with a doji formation, signaling relatively strong pressure for a reversal of the recent uptrend. Forex traders can benefit from this knowledge by entering their short positions early and riding the impending wave.

 

[forexyard]

Forexyard Analysis - U.S. Budget Deficit Set to Hurt the Dollar

President Barack Obama's announcement that the budget deficit is set to hit $1.75 trillion or 12% of GDP is likely to lead to a bearish Dollar in the medium-long term. Meanwhile, forex traders are advised to follow constant daily developments coming out of the U.S. economy, such as the release of today's quarterly U.S. GDP figures at 13:30 GMT. These figures are likely to determine the Dollar's bullishness going into next week's trading.

Economic News

USD - Dollar Floats on Faltering Economy

The Dollar gained against several of it major currency pairs, such as the EUR currency cross in early trading yesterday. However, those gains were quickly eroded as a glut of poor economic data from the U.S. helped to drive the pair back to its opening price level. The market absorbed less than stellar economic reports from the U.S. economy. Poor production data, lower housing numbers, and an increase in new unemployment claims took the energy from the EUR bulls and sapped the earlier gains from the EUR/USD. The pair began the day at 1.2716 and rose to a high of 1.2809. The USD closed up vs. the EUR by only 2 pips at 1.2732. The release of more poor performing data from the U.S. helped to sap the added risk taking in the forex market and the currency pair ended the day near its opening price.

Against the Dollars other currency crosses, however, it lost some ground. The Dollar closed down 25 pips vs. the JPY at 97.58, reversing 3 days of gains. This may have been due to better-than-expected economic figures released from Japan. The GBP/USD made a slight correction in yesterday's trading, as the Pound closed up 52 pips on the Dollar to 1.4297, making some amends for the previous days 300 pip decline against the greenback.

It should be taken into account that the market largely didn't react overly negatively to President Barack Obama's announcement that the U.S. government will run a $1.75 trillion budget deficit. This amounts to roughly 12% of U.S. GDP. The reason for this may be that traders still have confidence in the new president. However, if Obama fails to help kick-start the American economy after 6 months, then traders are likely to realize that Obama's talk is substance, and not addition. This may on effect lead to a bearish Dollar in the medium-long term.

Later today, there are several important economic data releases coming out of the U.S. The most important of these publications is the Prelim quarterly GDP figures at 13:30 GMT. Analysts have forecasted that the U.S. economy is contracting by 5.4%. Combine this and further long term pressures of such a large budget deficit and we could see the Dollar depreciate against the EUR, perhaps to the 1.2800 level. However, if the results turn out to be better-than-expected, then the EUR/USD pair may reach 1.2650 by late trading.

EUR - GBP Moves on British Bank Bailout

The GBP appears to have offered some stability in Thursday's trading. This comes about as Britain announces its most recent banking bailout. Yesterday, the British government unveiled a plan to protect banks from future losses related to bad debt. The plan was announced to backstop British banks that have lost billions of Pounds in the global financial crisis. This plan may ensure that British banks keep lending in spite of the large losses.

The new plan helped to increase risk taking in early trading yesterday, resulting in the GBP rallying against the Dollar and the EUR. However these gains dissipated as the day wore on, as risk sentiment disappeared. The GBP/USD closed at 1.4297 from 1.4245 Wednesday. The Pound also gained some ground against the EUR, as the pair closed down 33 pips at 0.8904.

A week banking system that has suffered losses from toxic debt has characterized the may put downward pressure on the GBP in the coming weeks. This is likely to continue as more pressure may fall on British bank regulators to nationalize the ailing banking system amid the global financial crisis. Royal Bank of Scotland (RBS) has in effect already been nationalized by the most recent capital injection by the British government. Further involvement could put help to depreciate the GBP against its major crosses.

JPY - JPY Free Fall Continues

The JPY continues to fall against the major currencies, but the selling in mass of the Yen was briefly halted by better-than-expected production data. The USD/JPY fell early this morning as preliminary industrial production fell by 10%. While the number appears to be drastic, traders were prepared for a much larger drop. When this did not occur, the JPY was given a large boost. The pair closed at 97.58, down 25 pips from yesterday's opening.

This production data is a stark reminder of the economic situation in Japan. Concerns regarding the fundamental weakness in the Japanese economy are having traders push the USD/JPY to its highest level in almost 4 months. The recent gains for the JPY may not hold as the market is very negative on its outlook for the Japanese economy. Further appreciation could take place in the USD/JPY and send the pair back to the 98.50 mark by the end of today.

Oil - Crude Oil Surges on Renewed Supply Cut Fears

Crude Oil experienced a sharp rise in prices yesterday as the Organization of Oil exporting Countries (OPEC) signaled it may be ready to make more supply cuts in the future. The price of Crude Oil jumped close to 5% yesterday to close at $44.48, up from $42.76. The United Arab Emirates (UAE) said it would reduce production supplies to Asia. This leads some Oil analysts to believe that more production cuts may be in store from the Oil cartel at their next meeting in March.

It appears OPEC may follow through on its promised supply cuts. In the past OPEC has announced future supply cuts, but member nations have sometimes been reluctant to comply as the drops in production lead to falling revenues for OPEC members. Recent data shows that the member countries have been steadily reducing their daily supply counts. This may lead to a further price appreciation for the commodity, perhaps to the level of $46 by the week's end.

Technical News

EUR/USD
Narrow range trading continues as the pair did not make a significant move in either direction, and is currently traded around the 1.2745 level. However, the 4 hour chart's RSI is floating near the bottom border, suggesting that the possible next move might be a bullish one. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

GBP/USD
The typical range trading on the hourly chart continues. Both the daily RSI and Slow Stochastic are floating in neutral territory. However, the pair currently sits near the bottom border of the 4 hour chart's RSI, suggesting an upward correction may be imminent. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

USD/JPY
The price of this pair appears to be floating in the over-bought territory on the daily chart's RSI indicating a downward correction may be imminent. The downward direction on the 4-hour chart's Momentum oscillator also supports this notion. Going short with tight stops might be the right choice today.

USD/CHF
The pair has been range-trading for a while now, with no specific direction. The Daily chart's RSI 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.

The Wild Card

Crude Oil
Crude Oil prices rose significantly in the last week and peaked at $44.50 a barrel. However, 4 hour 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.

 

[forexyard]

Forexyard Analysis - As the Global Economy Sinks the Dollar Rises to the Top

The USD may continue to strengthen on global economic weakness. As equity markets maintain their bearish momentum, the Dollar has shown considerable strength. The trend of buying Dollars over other major pairs could continue into this week as the global economy continues to suffer and risk aversion remains high.

Economic News

USD - USD Gaining on Negative Fundamentals

After stock markets plummeted to a 12-year low this past week, the USD apparently responded with a strong appreciation in value. Against its primary currency rival - the EUR - the greenback gained almost 100 points in early trading hours, and is currently trading near the price of 1.2600. It made similar gains against the GBP as it started the day at 1.4314 and currently stands near 1.4260.


Lately the U.S. Dollar has been strengthening as a result of a weakening global economy. With talk of multiple bailouts, stimulus bills, and stipulations for domestic investment, many large hedge funds are beginning to bank on those currencies which benefit from protectionism. Economies which rely on exports typically suffer the most from protectionism, whereas those economies which import more possess the ability to regain lost momentum during times of international draw-back. The USD is benefiting from just such an action.


Many banks and large financial firms are pulling out of risky investments and into safe-haven currencies, the Dollar being the primary safe-haven among them. As a result, traders are seeing a reversal to typical economic outcomes. With more negative news coming from every economy, traders may actually expect the value of the primary global safe-havens - the USD and Gold - to continue their rally and gain levels of strength not seen in decades. The coming week will be no different considering a multitude of economic indicators are expected to be released, all of which are forecast to show a continuation of economic suffering across the boards.

EUR - EUR Weakness Evident as Investor Confidence Writhes in Anxiety

Losing value to the majority of its currency pairs these past few trading days has made the EUR look less and less appetizing for willful traders. Trading down against the USD, just under the 1.2600 price barrier, the pair has been gaining momentum on its downward slide. Against the British Pound, the EUR is also taking losses, trading close to the 0.8840 price level in today's early trading hours.


Not helping this large regional currency was the fact that the European Union (EU) rejected recent calls for additional aid to Eastern European countries in need of financial assistance. What many analysts feared all along might just come true. The Euro-Zone is appearing to polarize into rival camps with the potential of instituting trade restrictions and protectionism within the region. Large economies, such as Germany, are pairing against the smaller, harder-hit economies of East Europe. Investors are bailing out of the 16-nation currency as a result.


After a series of economic data which has highlighted just how weak the Euro-Zone economy has become, the European Central Bank (ECB) appears poised to slash interest rates yet one more time to a record low of 1.50%. Britain may also be following this rising trend by cutting their rates by 50 basis points as well to 0.50% this Thursday. Traders have begun to price in these upcoming rate cuts and many investors believe this week will be one of the more interesting weeks in forex trading for 2009 thus far.

JPY - JPY Weakness Growing More Apparent

Those investors trading the JPY lately have taken note of the recent downward trend occurring with this island currency. When the global economic recession began, there was a rush to unwind carry trades when interest rates were being slashed. This helped strengthen the JPY. As economies posted continuous negative data the JPY became a safe-haven. However, nowadays the JPY is also showing signs of continued stress which has investors worried that the Japanese economy may not be able to withstand the rising tide.


Trading at record highs against its currency rivals in recent months, the JPY now stands to lose most of what it has gained. The foreboding of such a disastrous turn of events for Japan, this currency weakness will no doubt harm the island economy in ways which it may struggle to recover from. The JPY is currently trading at its lowest level in 2009, with a reading of 97.55 against the Dollar and 122.67 against the EUR. Traders won't likely see this trend reverse anytime soon.

OIL - Oil Demand Continues to Fall; As Does the Price of Crude Oil

After climbing to a recent high of $45 a barrel last week, the price of Crude Oil has apparently continued its descent. It has decreased in price for two consecutive days and currently stands just under $44 a barrel. This coming directly after a short-lived increase after it dropped to $42.50 during late trading hours last Friday.


It has been said by many analysts the world over that the ongoing economic recession is responsible for the downward slide in oil prices. This continues to be the case as many forecasts for oil demand are being reduced even further for the 2009 fiscal year. As the specter of this recession looms over investors, there is likely to remain a downward pressure on energy prices despite OPEC's recent production cut.

Technical News

EUR/USD
Since the opening of the trading week, the pair has dropped about 100 pips. The 4-hour chart shows that a bearish channel has been formed and that the pair is now testing the 1.2540 level. Traders should look for a breach of the support level, as it might trigger another bearish move.

GBP/USD
The cable has been range-trading within a restricted range for a few days, hovering around the 1.4270 level. Currently, a bearish cross on the 4-hour chart's Slow Stochastic suggests that the pair may enter a mild downtrend with a potential of reaching the 1.4200 level.

USD/JPY
It appears that the pair might have limited it bullish trend after peaking at 97.65. A fascinating triple doji has been formed on the daily chart, indicating that a strong breach is imminent, and as all oscillators are pointing down, it appears that the momentum is quite bearish. A breach of the 96.80 level might validate the bearish trend.

USD/CHF
Ever since the pair bottomed at the 1.1460 level, it has reversed course, and is now trading around the 1.1700 level. As both the MACD and the Slow Stochastic on the 4-hour chart are giving bullish signals, it seems that another bullish session is impending. Going long appears to be the preferable choice today.

The Wild Card

USD/NOK
The pair has entered an extremely strong bullish trend lately, appreciating over 2,500 pips in a few days. The 4-hour chart shows a very clear bullish channel, with the potential of reaching even higher. This might be a great opportunity for forex traders to join a very popular trend.

 

[forexyard]

Forexyard Analysis - Additional Bailout for AIG May Prove to be USD-Positive

The USD rose to its highest level in 2 years against all of its major currency counterparts on speculation that the U.S. government would pour a further $30 billion into American International Group (AIG), fuelling safety buying of the USD. With recent gains, the USD has obtained a momentum that some say will last at least through the rest of March 2009.

Economic News

USD - USD Forecasted to Strengthen Through March

The USD rose to its highest level in 2 years against all of its major currency counterparts on speculation that the U.S. government would pour a further $30 billion into American International Group (AIG), fuelling safety buying of the USD. The Dollar was also held gains after a report showed U.S. consumer spending and personal income came in better than expected in January. The fact that the U.S. authorities seem to be taking swift actions to overcome the crisis in the financial system has supported the Dollar lately, which looks to be relatively less risky than the other currencies.

The Dollar was traded at 1.2574 per EUR yesterday, after climbing 0.7%, while against the JPY the Dollar was little changed, at 97.48 per Yen. The greenback has also strengthened versus the British Pound, falling below 1.4000 yesterday after data showed U.K. home prices dropped the most since 2001. Despite the fact that the U.S. economy is still very weak, it seems that the investors expect the U.S. to recover first from the global economic crisis. And the country's potential to be the first economy to pull out from recession is confirmed by the improvements in the ISM manufacturing, personal income and personal spending data.

Meanwhile, the news from AIG, and worries about Eastern Europe has been of most market interest, which has been benefiting the Dollar. Today, investors should be closely looking to upcoming U.S data, especially the Pending Home Sales report, for more clues on the depth of the recession. With recent gains, the USD has obtained a momentum that some say will last at least through the rest of March 2009.

EUR - The EUR Cannot Withstand Strong Dollar Gains

The European currency slumped to its lowest in 3 months on Monday as traders anticipated another interest rate cut and a shift to quantitative easing from the European Central Bank (ECB) at its policy meeting Thursday. The European Central Bank expected to cut its main refinancing rate to a record low of 1.5% on March 5th to spur economic growth .The currency also came under pressure and fell 0.7% to 1.2579 against the Dollar as a summit of European Union (EU) leaders rejected a mass bailout of countries in Central and Eastern Europe.

Meanwhile, the GBP also slid 2.2% versus the USD to less than 1.4000 for the first time in more than a month. The GBP weakened after reports showed U.K. banks granted fewer mortgages in January than economists forecast and house prices declined an annual 10% last month, adding to evidence that the recession in Europe's second-biggest economy is deepening.

The EUR was hit hard not only by the EU rejection of the bailout for Eastern Europe but also by a survey showing Euro-Zone manufacturers had their worst month in 12 years! Analysts said that if not for heavy selling of the British Pound against the EUR, the Euro-Zone currency might have been pushed toward the 1.2330 level against the greenback.

JPY - Is the Yen Still a Safe-Haven Contender?

The JPY was among the few currencies to climb against the USD on Monday, as the currency's sharp rebound late last week from a weekly slide worried Japanese exporters and prompted them to sell the Dollar early to hedge their overseas earnings.
The Japanese currency rose slightly to 97.45 against its U.S counterpart after declining 9.6% last month. The Japanese currency has fallen nearly 11% against the Dollar since hitting a 13-year high of 87.10 Yen in January, with the slide worsening after poor GDP numbers and the resignation of the Japanese finance minister last month.

The Yen also rose against the Euro-Zone currency for a third day, climbing to 122.41 per EUR as stocks tumbled on concern that the global recession is deepening, prompting investors to buy the Japanese currency as a refuge. Analysts have said that the Yen's sharp depreciation might be stalled at the resistance level of 98.89. Since the JPY has failed to break that level in the next two weeks, the Yen might rise to as high as 94.63 against the greenback.

Oil - Oil Prices Weaken; Will OPEC Cut Production Further?

Crude Oil prices continue to remain steady on Tuesday, hovering just above $40 a barrel. Crude Oil prices stabilized after previously dropping almost 10% on increased signs the deepening global recession will limit fuel demand. However, Crude Oil is likely to continue declining if the USD will strengthen further against its currencies of six major U.S. trading partners, thus reducing the appeal of commodities as an alternative investment. Market players await the U.S. inventory data being released on Tuesday, as the figures are likely to show the impact on demand from the world's top energy consumer.

Crude Oil prices, which fell to a 5-year low of $33.87 a barrel on Dec. 19th, have rebounded recently as the Organization of Petroleum Exporting Countries (OPEC) restricted production further. Although OPEC officials gave conflicting signals on their intentions to further cut output in order to bolster prices when they meet in Vienna on March 15th, it created certain expectations in the mind of market participants. Investor sentiment is expecting OPEC to make another cut, but if the cartel decides not to lower crude production when it meets, analysts anticipate that Oil prices have much further to fall, perhaps below $30 a barrel.

Technical News

EUR/USD
The daily chart is showing mixed signals with its RSI fluctuating in neutral territory. However, the 4-hour chart's RSI is already floating in the over-sold 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 the preferable strategy.

GBP/USD
The typical range trading on the daily chart continues. Both the daily RSI and Slow Stochastic are floating in neutral territory. However, the pair currently sits near the bottom border of the 4-hour chart's Bollinger Bands, suggesting an upward correction may be imminent. When the upwards breach occurs, going long with tight stops appears to be the preferable strategy.

USD/JPY
The bullish trend is losing its steam and the pair seems to consolidate around the 97.00 level. The daily chart's RSI is already floating in the over-bought territory suggesting that the recent upwards trend is losing steam and a bearish correction is impending. Going short with tight stops appears to be the preferable strategy.

USD/CHF
The daily chart is showing mixed signals with its Slow Stochastic fluctuating in the neutral territory. However, a fresh bullish cross on the hourly chart's Slow Stochastic implies that an upwards correction might take place in the nearest time frame. When the upwards breach occurs, going long with tight stops may be a wise choice.

The Wild Card

Gold
Gold prices are once again dropping, and it is currently trading around $924.10 an ounce. At the moment, the daily chart's Slow Stochastic is giving bullish signals, indicating that gold prices might go up in the near future. This might give forex traders a great opportunity to enter a very popular trend.

 

[forexyard]

Forexyard Analysis - European Rate Cuts in the Foreground for Forex Traders

European rate cut decisions, like those expected tomorrow by the ECB and BoE, typically result in traders pricing-in the impact a day or two ahead of schedule. As such, we may be seeing the depreciation of the EUR continue through the day as most traders are near 100% positive that the ECB will in fact slash rates by 50 basis points tomorrow around noon. This weakness will likely continue throughout today's trading.

Economic News

USD - Equity Losses Fuel USD Appreciation

Slumping equity markets continue to put pressure on higher yielding currencies and in turn are boosting the Dollar. The Dow Jones Industrial Average posted another losing day yesterday. Falling equity markets are influencing the forex market by reducing risk appetite. The Dollar has been the primary beneficiary of these market conditions and yesterday was no exception. At the end the day, the Dollar was higher across the board.

Adding to the market's aversion to risk was a Senate testimony from Federal Reserve Chairman Ben Bernanke. Bernanke remarked that the possibility remains for additional bailouts in the U.S. banking system. Investors did not take too kindly to this news and showed their disdain by buying Dollars. The theme of bidding up the Dollar as risk aversion climbs has been dominating this week's trading.

Today's trading may see a similar theme play out as major economic data is due to be released from the U.S. The ADP Non-Farm Employment Change is forecasted to show another large drop in unemployment numbers. Also the ISM Non-Manufacturing PMI looks to show deepening pessimism in the U.S. economy. The EUR/USD may drop further on negative news, perhaps even past the significant support line of 1.2400.

EUR - European Currencies Pricing in Expected Rate Cuts

The EUR has faced a rough week thus far. Currently losing against every major currency rival, the EUR may in fact be pricing in tomorrow's expected rate cut by the European Central Bank (ECB). Declining to 1.2525 against the USD in today's early trading hours, and down to 0.8900 against the GBP, the EUR is a little worse for wear.

Typically before an important interest rate decision by the ECB, traders begin to anticipate the policy decision and price-in the impact a day or two ahead of schedule. As such, we may likely be seeing a depreciation of the EUR as most traders are near 100% positive that the ECB will in fact slash rates by 50 basis points tomorrow around noon. Moreover, we may likely see a continuation of this pricing-in up until the moment of its announcement.

However, if for some reason the ECB follows Australia's lead and decides to hold rates steady, there will be a dramatic shift into an upward correction for the EUR pairs and crosses as traders re-value the EUR in a positive direction. As this is unlikely, given recent European economic news, traders are likely to see just such a rate cut.

Looking at today, with very few indicators being released from the Euro-Zone the driving force behind the movement of this currency is going to be Dollar news and the anticipation of tomorrow's interest rate cuts by the ECB and Bank of England (BoE). These rate cuts appear to be in the foreground to this week's trading as many traders are making large profits off the movement which typically follows such an announcement.

JPY - RBA Surprises the Market with Interest Rate Decision

The Australian Dollar has seen particularly heavy volatility due to major economic events in the Aussie economy the past two days. Yesterday the Reserve Bank of Australia (RBA) held its cash rate steady at 3.25%, taking the markets by surprise. Economists had forecasted a 25 basis point cut in the Aussie Interest Rate which the market had previously priced into the AUD pairs and crosses. Another surprise to the market was a significantly better than expected Current Account. This measure showed considerable strength in the Australian economy despite a recession-filled global economy.

These two market releases helped to boost the AUD/USD from 0.6292 to a high of 0.6463. However, losses in global equity markets reduced the demand for higher yielding currencies and helped to shed the pair's gains. Early this morning, Australian GDP was released and the indicator came in significantly under the forecasted value. Economists had forecasted a contraction of 0.2% but the actual value released was a drop of 0.5%. This accelerated the selling of the AUD that began with U.S. equity losses. The pair is currently trading near the 0.6360 mark and may continue its descent for the near future.

Oil - Traders Await Crude Oil Inventory Report

The Price of Crude Oil saw heavy price volatility yesterday, which declined in the European trading session but later jumped 5% during the New York trading session. The rise in price was due to increasing expectations that OPEC will make further supply cuts during its next meeting. Crude Oil closed the day up at $41.45 from yesterday's price of $39.59.

A number of conflicting forces are influencing the price of Crude Oil. Declining equities throughout the world's markets combined with weakening demand in the face of the recession are exerting pressure on the price. In contrast, future OPEC supply cuts mixed with a decline in last week's Crude Oil Inventory Report have helped to increase the price.

Today, Crude Oil traders await this week's Crude Oil Inventory Report from the Energy Information Agency (EIA). The report is forecasted to show a rise in Crude stocks by 300,000. A reading higher than the expected value could put further pressure on the price of Crude Oil with a target price of $40.

Technical News

EUR/USD
It appears a violent breach of the lower border on the 4-hour chart's Bollinger Bands has occurred, signaling that an upward correction may occur in the near future. The recent bullish cross on the daily chart supports this notion. Going long might be a wise choice today.

GBP/USD
This pair appears to be leveling off in anticipation of a volatile movement. The Bollinger Bands on the hourly and daily chart have begun to tighten, signaling that this movement could be coming later today. With momentum shifting into a downward position, this volatile move may be negative for the GBP. Traders should wait for the breach, and then ride out the wave for profits.

USD/JPY
A bearish cross has recently formed on the 4-hour chart's Slow Stochastic and the price of this pair currently floats in the over-bought territory on the daily chart's and 4-hour chart's RSI. These oscillators are signaling that the upward momentum may begin to shift in the near future into a downward posture. Going short with tight stops might be a wise choice later today.

USD/CHF
It appears a breach of the upper border of the hourly chart's Bollinger Bands occurred early this morning, indicating the pair may correct downwards in the nearest future. However, the bullish channel which this pair is currently trading in has not been penetrated by a clear breach of its upper or lower levels. Trading within this range by buying on lows and selling on highs might be a wise choice today.

The Wild Card

Gold
The price of this commodity currently floats in the over-sold territory on the 4-hour chart's RSI, indicating an upward correction may occur in the immediate future. With the recent bullish cross on both the 4-hour and daily chart's Slow Stochastic oscillators, this correction may indeed be imminent. Forex traders can earn high profits today by opening large buy positions and riding out this impending movement.