Forexyard Analysis

[forexyard]

Forexyard Analysis - European Rate Cuts to Determine Today's Market

One of the most important events for forex traders is a decision on short-term interest rates by central banks. Today, not 1, but 2 central banks are set to decrease interest rates by 50 basis points. The European Central Bank (ECB) and Bank of England (BoE) will likely decrease their rates around noon today (GMT), leading to depreciation across the boards for the EUR and GBP. This will no doubt be today's market mover.

Economic News

USD - Dollar Plunges as Wall Street Rallies

The Dollar fell against most of its major currency pairs in yesterday's trading. The Dow Jones ended up 150 points or 2.5%. The stock market rally in the U.S. was spurred by positive news from China that economic stimulus will be dramatically increased. Stocks also moved on Crude Oil Inventory data showing that U.S. Crude Oil storage decreased by 700,000 barrels, rather than the forecasted increase of 1 million barrels. Additionally, the U.S. reported an increase in demand for Oil, helping increase investors' confidence.

Adding to this positive news, the Treasury Department revealed details of President Obama's housing stimulus plan. To put it bluntly, it seems that investors took Obama's advice and bought some undervalued stocks. This move away from the safe-haven Dollar to riskier assets led to a dramatic decline in the greenback yesterday.

The Dollar fell by over 120 points versus the EUR ahead of today's expected rate cut by the European Central Bank (ECB). The British Pound also recorded some strong gains against the Dollar, with the Pound climbing about 140 points to 1.4155 against the Dollar. This is also ahead of a possible rate cut by the Bank of England (BoE) later today. Against the Japanese Yen, the Dollar actually rose by an impressive 70 points to 99.16, as Japanese investors also flocked to riskier assets yesterday, leading to their stock market to rally as well.

Looking ahead to today, there is a lot of economic news coming out of the U.S. which traders should pay close attention to. Traders are also advised to follow the Interest Rate decisions coming out of Britain and the European Union (EU) around midday as these will no doubt be the market drivers during today's trading.

EUR - EUR Jumps Ahead of Today's Rate Cut Decision

The European currency went bullish against its major currency crosses in Wednesday's trading. This was largely due to the knock-on effects from Wall Street, which saw the American stock market climb by several percentage points. This also led to rallies in Europe. The stock market rallies in both Europe and the U.S. were initiated by a decrease in U.S. Crude Oil inventories, high hopes for China's economy, Obama unveiling a new housing plan, and investors buying undervalued stocks. This in turn led investors to drop the safe-haven U.S. Dollar, and to buy-up riskier currencies such as the EUR and GBP.

The EUR made notable gains against a number of its most important currency pairs in Wednesday's trading. The European currency rose by 130 points to close at 1.2615 vs. the USD. It also rose by an impressive 220 points vs. the JPY to 125.12. The EUR/GBP currency pair ended yesterday's trading virtually unchanged ahead of today's rate cut decision in both Britain and the Euro-Zone and closed at 0.8910. The Pound also made similar gains vs. the USD and JPY. If the media responds positively to the bullish European currencies in early morning news, then the GBP and EUR may further their gains against their main currency pairs and crosses.

Today, there are very important economic news events coming out of Britain and the Euro-Zone. These include the British and Euro-Zone Interest Rate decisions by the Bank of England (BoE) and the European Central Bank (ECB) at 12:00 GMT and 12:45 GMT respectively. British rates are expected to be cut by 50 basis points to 0.50%, whereas Euro-Zone rates are expected to be cut by 50 basis points to 1.50%. If either the Euro-Zone or Britain decides not to cut their respective Interest Rates, then this may help their respective currencies to make significant gains against their main currency crosses within a 3-4 hour period after the announcement.

JPY - JPY Sinks as Safe-Haven Currency Ditched

Forex traders ditched the JPY yesterday as they looked for short-term riskier assets. The Japanese Stock market made massive gains, largely influenced by Chinese Premier Wen Jiabao revealing that China will make drastic moves to push China's economic growth to 8%, rather than the forecasted 6%. This will include possibly doubling the 4 trillion Yuan ($600 billion) stimulus plan. As a result, stocks climbed yesterday. This came about as the weaker Japanese Yen encouraged confidence on stocks that were highly correlated with exports. The JPY's bearish behavior yesterday actually came as a relief for the Japanese government, as the Yen has gone from strength to strength against its major currency counterparts since the beginning of the global financial crisis, which has hurt Japanese exports.

The Yen fell by 70 points against the Dollar to close at 99.16. Against the EUR, the Yen plummeted by a dramatic 220 points to close at 125.12. Japan's currency also declined vs. the Pound by a massive 240 points to close at 140.39. The JPY may slide further today, owing to negative economic data that came from Japan last night revealing that Capital Spending declined more than forecast to -17.3%. This may push forex traders away from the Yen, and to other currencies, as Japan's economy worsens.

Oil - Crude Oil Soars to $45 a Barrel

Crude Oil prices soared by an impressive 9% in yesterday's trading to close at $44.90 a barrel. This advance in the black gold's price came about as U.S. Crude Oil Inventory figures, which were released yesterday, showed that storage decreased by 700,000 barrels rather than the forecasted 1 million barrel increase. In addition, Crude prices were also helped by reports that demand from the U.S. for oil increased as of late. This led many investors to the conclusion that the U.S. may already be starting to recover from recession. This comes about as the U.S. showed some mixed figures yesterday.

The other factor which helped spur the Crude prices yesterday was positive news coming from China that they may double their stimulus plan and increase investments in infrastructure and manufacturing. The result of this was a dramatic increase of commodity prices, such as Crude Oil. Only time will tell if prices are able to hit $46 by the end of trading today. A release of a string of positive economic figures could support this price level. Therefore, traders are advised now to make some profits as the price of Crude Oil is set to remain volatile in the short-medium term.

Technical News

EUR/USD
This pair appears to be consolidating towards the center line of the Bollinger Bands on all charts, indicating a lack of direction. However, the recent bullish cross on the daily chart's Slow Stochastic signifies that a bullish correction may take place in the nearest future. Going long might be the right choice today.

GBP/USD
The Bollinger Bands on the hourly and daily charts appear to be tightening in anticipation of a volatile movement. With the recent bearish cross on the 4-hour chart's Slow Stochastic oscillator, the impending movement may be a downward correction. Going short with tight stops might be the right choice today.

USD/JPY
The 4-hour chart's RSI oscillator is currently floating in the over-bought territory. The chart also shows a bearish cross on the Slow Stochastic, suggesting that the bullish trend is losing steam and a bearish correction is impending. This notion is also supported by the daily chart's RSI oscillator which is currently floating in the over-bought region. Going short looks to be a good option for the day.

USD/CHF
The hourly chart shows the pair range trading between the 1.1750 and 1.1710 levels; however, there appears to be a bearish cross on both the hourly chart as well as the daily chart's Slow Stochastic, signaling a continuation of the correction to the up-trend seen the past few days. Setting short positions with tight stops might be the right choice today.

The Wild Card

Crude Oil
The price of this commodity appears to be floating in the over-bought territory on the 4-hour chart's RSI, signaling a downward correction may be imminent. The recent bearish cross on the 4-hour chart's Slow Stochastic supports this notion. Entering an early short position on Crude Oil may help forex traders earn substantial profits today as they ride out the impending downward movement.

 

[forexyard]

Forexyard Analysis - USD Bearishness Set to Continue Today

Analysts expect the Dollar to fall further against its major currency crosses today, as the U.S. it expected to release some negative economic data, such as Unemployment Claims at 13:30 GMT. In the meantime, forex traders are advised to take advantage of market volatility as this week's trading session comes to an end.

Economic News

USD - Dollar Moves on Deteriorating Economy

The Dollar finished Thursday's trading session lower versus most of its major currency pairs, as fears about the viability of General Motors, and the U.S. and European banks sent shock waves through the forex and U.S. stock market. Some better-than-expected economic figures coming out of the U.S. yesterday failed to make up for the losses the Dollar suffered from the tumble on Wall Street. This may be due to Unemployment Claims figures still being over the 600,000 level, indicating that the U.S. still has a long way to go before it recovers from the current economic crisis.

The Dollar finished down about 60 pips vs. the JPY yesterday, pushing the currency pair to the 98.23 level. The Pound also made some gains against the greenback to finish up 21 pips at 1.4176. The USD, however, rose 38 pips against the EUR to finish yesterday's trading session at 1.2577. The 2 former results are notable, as the Interest Rates cuts in Britain and the economic troubles in Japan failed to push down the GBP and JPY vs. the Dollar yesterday. It is also likely that the Dollar's bearishness against several of its major currency pairs yesterday was partly owed to investors realizing that the Dollar was slightly over-valued, leading to a reversal in some of the greenback's recent gains.

Later today, there are several important economic data releases coming out of the U.S. These include the Non-Farm Employment Change, the Unemployment Rate, and the Average Hourly Earnings figures all at 13:30 GMT. All 3 of these are expected to be worse than the previous released figures. Therefore, if the actual results are the same as forecasts, then the Dollar may continue Thursday's bearish trend. However, better-than-expected results may push the Dollar higher against its major currency rivals, going into the beginning of next week's trading session.

EUR - EUR Tumbles on Rate Cut Decision

The European currency slid against most of its major currencies crosses during yesterdays trading session after the European Central Bank (ECB) lowered its Interest Rate from 2.0% to 1.5%. Losses were also owed to large falls in European stocks. The rate cut marks a record low for the Euro-Zone, as the Euro-Zone's economic fortunes have gone from bad to worse in recent months. The EUR fell nearly 40 pips vs. the USD to 1.2577 from the1.2615 level yesterday. Against the Yen, the European currency tumbled by over 150 pips to close at 123.57. Additionally, the EUR dropped 40 pips against the GBP to finish yesterday's trading session at the 0.8870 level.

Following the rate cuts and recent economic events in the Euro-Zone, Investors now speculate that ECB President Jean-Claude Trichet may make additional rate cuts in the near future, as the economic slump deepens. This view is largely owed to Trichet's speech following the rate cut decision, in which he warned of a protracted economic slowdown. Moreover, analysts argue that deflation could reduce the possibility of a potential economic recovery in the Euro-Zone in the second half of 2009. Analysts argue that for conditions to improve, the ECB needs to follow the U.S. Federal Reserve's in tackling the recession. However, the latest ECB cut rate may turn out to be an effective decision that is likely to assist banks in upholding liquidity, and bringing more confidence to the markets.

Today, the Euro-Zone will be absent from the economic calendar. The EUR's trends are likely to be affected by news developments from Britain and the U.S. Analysts forecast that the EUR and GBP are expected to record a volatile trading session today, as the forex market continues to move on yesterday's rate cut decisions from both countries. Traders should keep a close eye on the news coming out of the U.S. and Britain as the economic news coming out of these 2 countries are likely to be additional factors in determining the EUR's movement today. This is the case especially with the release of the U.S. Non-Farm Employment Change and Unemployment Claims data later today.

JPY - Yen Bullishness Set to Continue as Economic Crisis Worsens

The Japanese currency experienced a bullish trading session yesterday, as it appreciated against most of its major currency pairs. The JPY gained about 40 pips versus the USD during yesterday's trading session, and closed at 98.23. Its gains against the EUR were more dramatic, as it gained over 150 pips to close at 123.57. This came about as the Euro-Zone economic woes continue, and on Thursday's rate cut decisions. The JPY also made large inroads of over 100 pips vs. the GPY as Britain to cut her Interest Rates to finish yesterday's trading session at 139.30. This result was also owed to the deepening bank crisis in Britain.

The Yen's strength yesterday was additionally owed to other important factors. Stock market indices all over the world fell by several percent yesterday on persistent worries about the deepening economic downturn, which has driven traders back to the safe-haven Yen. There are no economic data releases expected from Japan today. However, the JPY is likely to move on economic news events coming out of the U.S. and Britain. These releases are likely to determine the JPY's bullishness going into the middle of next week. Expect JPY bullishness to continue as traders pull their money out of riskier assets, and into more safe-haven ones.

Crude Oil - Crude Oil Plummets 5% as Global Recession Deepens

Crude Oil fell about $1 or 5% during yesterday trading session to close at $43.89. This came about as stock market indices throughout the world plummeted yesterday, raising fresh concerns about Oil demand as fears about a prolonged global recession and falling global demand of Oil return to the forefront. This comes about just a day after Crude Oil soared by 9%. Analysts foresee that if current economic conditions continue, then Crude Oil prices may stand at $40 by the end of next week's trading session.

It is important to note, however, that recently, the lower demand in Oil has fueled the heavy losses in the black Gold's value. The losses yesterday on Wall Street was the last thing that Crude prices needed, as investors previously believed that Oil prices may finish this week at as high as $50 a barrel. The release of the U.S. Non-Farm Employment figures at 13:30 GMT is likely to show a poor performance, adding additional downward pressure on Crude prices.

Technical News

EUR/USD
The pair is testing the very important key resistance level of 1.2615. The 4 hour chart is showing mixed signals with its Slow Stochastic fluctuating at the neutral territory. However, the Daily Chart's RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. Going long with tight stops appears to be preferable strategy.

GBP/USD
The bullish trend is loosing its steam and the pair is consolidating around the 1.4180 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.

USD/JPY
The typical range trading on the daily chart continues. Both the RSI and Slow Stochastic are floating in neutral territory. The hourlies are also providing mixed signals with no specific direction. Good strategy might be to wait for a clearer signal before entering the market n this pair.

USD/CHF
There was a violent breach of the Bollinger Bands' lower border on the hourly chart, indicating a bullish correction may take place in the near future. In support of this, the pair also floats in the oversold zone on the 4 hour chart's RSI. Once the reversal takes place, going long with tight stops might be a preferable strategy.

The Wild Card

Gold
Gold prices rose significantly in the last week and peaked at $937.80 for an ounce. However, the 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 - Dollar Volatility to Continue as Banking Crisis Returns...

The Dollar is set to be the dominant currency in the forex market this week, as the banking crisis returns to the forefront. The banking share slump and the bullish Oil prices may hurt the Dollar this week, as traders bet against the greenback.

Economic News

USD - Dollar Goes Bearish on Weak Economic Data

The Dollar experienced a volatile session last week, which was concluded with much bearish behavior in USD crosses. Since Friday, the USD has undergone a bearish trend against the EUR, depreciating over 80 pips to close at 1.2673 at the end of Sunday's trading session. Much of this is owed to data that came from the U.S on Friday; the Non-Farm Employment Change, showing that 651,000 people lost their jobs during February. It's important to note that these figures were worse than forecasted. What's more, U.S. unemployment now stands at 8.1%, a rate not seen in decades. The weak figures from the U.S. are likely to lower the consumption quantity from consumers during the following months, which is highly likely to have an immense impact on the Dollar's strength.

The Dollar lost 20 pips against the Yen to close at 98.02. This may show that the Dollar may not be making the comeback that analysts previously forecast. For example, on Tuesday, the Dollar hit as high as 99.66 on Tuesday, before sliding dramatically. We will have to see how the day unfolds to accurately determine the USD/JPY cross this week. The USD gained about 30 pips in yesterday's trading against the GBP to close at 1.4123. The main factor that is likely to determine the level of this currency pair this week is how investors portray President Obama and his administration in tackling the U.S. economic situation.

As for the week ahead, the vital data expected from the U.S economy is due on Thursday and Friday, and is forecasted to continue with the negative line. The Retail Sales data release is expected to be poor, and the Unemployment Claims are expected to reach 640,000. The Consumer Sentiment survey on Friday is predicted to continue with a downtrend, and to drop beneath the 50 mark. Such a result will reflect a severe lack of trust by the American citizens that their economic situation is about to improve soon. Traders are advised to keep track of the real results of the main publications, as any surprising data might change the course of trends.

EUR - EUR Set for Another Volatile Trading Week

The EUR underwent a volatile trading week, seeing mixed results against the major currencies. On one hand, the EUR rose 200 pips against the Dollar to close Friday's trading session. However, on the other hand it did not manage to appreciate against the JPY. Last week's most significant announcement was made by the European Central Bank (ECB), which cut Interest Rates by 0.5% to a record low of 1.5%. Now, the entire Euro-Zone is expecting to see whether the low rates will manage to help lift the region out of the worst recession since World War Two.

The immediate reaction to the rate cut decision was a drop in the value of the EUR against the Dollar. However, the poor employment data from the U.S. helped reverse the trend slightly, as the Dollar dropped on all fronts. As of Sunday's closing price, the EUR closed lower by about 10 pips against the GBP, and currently stands at 0.8970. Against the USD, the EUR closed down about 20 pips at 1.2673. In the long-term, the EUR is expected to strengthen even further against its main currency pairs, as it seems unlikely that the ECB will slash Interest Rates again in March.

As for this week, most of the news that might influence the EUR will come from the strongest economy in the Euro-Zone, the German economy. Almost all indicators such as the German Factory Orders, the Consumer Prices Index, and the Trade Balance are forecasted by analysts to deliver weak figures. This may generate a modest downtrend for the European currency. Despite expectations, traders are advised to follow economic news coming from the U.S and British economies as well, as they are likely to be an important catalyst in dictating this week's trends.

JPY - JPY Upholds its Safe-Haven Status

Last week, the JPY saw predominantly bullish trends against the major currencies. The JPY rose around 300 pips against the GBP until midweek. However, these massive gains were short-lived, as the British currency made up for some of its losses. The GBP/JPY barely moved in Sunday's trading and closed at 138.47. The JPY took 20 pips out of the USD in yesterday's trading as the pair closed at 98.02. Some of these results show that the Yen rose as a result of the problematic data published from the U.S and the Euro-Zone

As of late, it is clear that Japan is in deep recession. However, its current condition still seems to be better than most of the leading Western countries and that is the main factor pushing the JPY higher as of late. This week traders should look forward to the Japanese Final Gross Domestic Product figures on Wednesday night, as this should be the most intriguing data from the Japanese economy this week. In addition, as proven in the past few weeks, it is the news from the West that is influencing the Yen the most. Traders must keep that under consideration and set their positions on the JPY in accordance.

Oil - Crude Oil Hits $46.50 a Barrel

The biggest development last week was that Crude Oil rose to over $46.50 a barrel for the first time in nearly 2 months. There are two main factors that supported Oil prices last week. Firstly, OPEC recently announced that the current low prices of Oil may lead to a supply crunch by 2013, and thus rejecting some arguments made lately by analysts that the cheap Oil might help the global economies recover. Second, the slide in the Dollar's value last week largely contributed to the ascending Oil prices, as Crude Oil is valued in Dollars.

Traders should differentiate between the two reasons listed above. Whilst the first one is no more than an attempt made by OPEC to stop the decreasing Oil prices, and therefore could only affect the price of Crude Oil in the short-term, the second reason is much more crucial. For as long as the USD will continue to depreciate, it is very likely that Oil prices will rise in accordance. However, if the USD will not drop severely, Oil will probably continue to be valued at about $40 a barrel, which seems to be a reasonable price in helping the global economic recovery.

Technical News

EUR/USD
On the 4-hour chart the pair continues to range trade in the upper half of its Bollinger Bands. Both the hourlies and the daily charts are providing mixed signals with no significant breach. Such a range trading floating nature may provide a good opportunity for traders to safely buy on the lows and sell on the highs while profiting from the relatively predictable range trading.

GBP/USD
A bullish cross may be forming on the hourly chart, indicating a potential price movement towards the upper resistance level of 1.4300. The daily chart's Bollinger Bands are tightening, indicating that a violent breach may take place in the next few hours, supporting the potential bullish movement.

USD/JPY
The bullish trend is loosing its steam and the pair seems to be consolidating around the 98.25 level. The 4-hour chart shows a fresh bearish cross that has just formed, indicating a future downward price movement. Supporting this is the RSI on the hourly chart which is floating in the overbought territory. Traders may look for the pair to reach a lower support line of 97.50.

USD/CHF
After bottoming at the1.1486 level on Friday, the pair has now consolidated a bit higher around the 1.1600 mark. A fresh bearish cross has just formed on the hourly chart and the upper Bollinger Band was also breached, indicating a potential downward movement in the near future. Going short today looks to be the right move for traders.

The Wild Card

Gold
Gold prices rose again significantly in the last week and peaked at $957.88. This may present an overbought situation as the 4-hour chart's RSI is presently in the overbought territory, while the weekly chart shows a bearish cross has formed on the Slow Stochastic with its RSI floating in the over sold region. This week forex traders can take advantage of the overbought situation in Gold for a healthy profit.

 

[forexyard]

Forexyard Analysis - Bernanke Speech to Impact Dollar

The Dollar is likely to go volatile during and following the speech by the U.S. Federal Reserve Chairman Ben Bernanke today at 12:30 GMT. Meanwhile, forex traders are advised to take positions on trades, as a string of data releases coming out of Japan, Britain, and the Euro-Zone are likely to affect the greenback's main currency crosses.

Economic News

USD - Dollar Advances on Deepening Global Recession

The Dollar rose against most of its major currency pairs on Monday. This comes about as falling global equity markets and economic deterioration in Japan and Europe, which are more serious than the slowdown in the U.S., have boosted safe-haven demand for the U.S currency. Nevertheless, the U.S. has also released gloomy economic data. Last Friday's report showed that the U.S. unemployment rate rose to a high of 8.1% in February, as employers cut 651,000 jobs. This reveals that the U.S. has the highest unemployment rate since 1983. Analysts expected weak figures from the U.S. to lead market participants to take positions against the USD in Monday's trading. However, in many respects, much the opposite has happened.


In late afternoon trading, the USD was up 0.4% against the Yen at 98.78, and ended yesterday's session up over 90 pips at the 98.94 level. Against the EUR the Dollar fluctuated between gains and losses, finally by settling virtually unchanged at 1.2674. The Dollar's biggest gains came against Sterling, which fell to 1.3740, the lowest level since Jan. 26th. The currency cross ended yesterday's session with the GBP down nearly 300 pips against the greenback at the 1.3843 level.

Analysts predict that the Pound is likely to continue to remain vulnerable to the woes of the Britain's financial sector as investors fear more gloom, despite massive government capital injections and guarantees. Meanwhile, the USD is likely to strengthen further against the JPY, as the deepening downturn in Japan has taken the lure off the Japanese currency as a safe-haven in recent weeks. A number of analysts hold the opinion that intensified worries over grim Japanese data might take the Dollar back within sight of the key 100 Yen mark.

Looking ahead to today, there are 2 data releases that may help determine the Dollar's strength in late trading today. These are the IBD/TIPP Economic Optimism and Whole Inventories figures both at 14:00 GMT. The thing that is likely to impact the Dollar the most is U.S. Federal Reserve Chairman Ben Bernanke's speech about the state of the U.S. economy at 12:30 GMT. Forex traders are also advised to follow economic news events coming out of the Euro-Zone, Japan, and Britain, as these are likely to help determine the Dollar's main currency crosses by the end of today's trading.

EUR - Pound Crashes to a 6 Week Low vs. the U.S Currency

The Pound dropped to a record low against the Dollar yesterday, and also weakened against the EUR on growing concerns about the outlook of the British banking sector.
The GBP was also hit as the Bank of England (BoE) this week will begin to implement its buying of 75 billion sterling worth of assets to boost the money supply, analysts said. The (BoE) said on March 5 that it plans to buy 75 billion pounds of gilts and corporate debt funded by new money in the next three months as it tries to bring down Interest Rates and pull the economy out of its first recession in 17 years.

The British currency fell 2% yesterday against the USD to $1.3843 from $1.4123. Against the EUR, it declined 1.8% to 0.9151 from 0.8970. It also fell 1.3% vs. the Yen to 137.03 from 1.3847. Worries amongst investors were intensified yesterday after Lloyds Banking Group; the biggest mortgage lender said over the weekend that the British government would get a stake of up to 77% in the bank after agreeing to underwrite 260 billion pounds of risky assets.

Market players expect the Sterling to weaken further, in line with medium-term monetary and fiscal realities. Therefore investors should buy the EUR against the Pound following the Bank of England's decision. As the British Pound continues to persistently sell off on each and every negative news flow from British banks, it might drop vs. the USD to as low as the 1.3650 level in the coming days.

The EUR may also make losses against the Dollar, and trade at the $1.2500 by week's end as European finance ministers resist doing more to boost their economies. This is even as the World Bank forecasts the biggest global recession since World War II. The European Central Bank (ECB) has already reduced its main refinancing Rate last week to 1.5%, and ECB President Jean-Claude Trichet stated at a press conference in Basel, Switzerland yesterday the world may be approaching a turning point, and that further measures taken by central banks and governments are likely to stimulate economic growth.

JPY - Yen Slides on Weakening Economy

The Yen fell broadly on Monday on speculation economic conditions in Japan are deteriorating due to the global recession, thus reducing the appeal of the Japanese currency. The JPY declined against most of its major currency pairs after a Cabinet Office report prediction showed that the leading index of business conditions fell to 77.4 in January from 80 in December. Japan fell into its first current account deficit in 13 years in January as the global recession crushed export demand and income from overseas investment. Making the situation worse, Japanese policy makers have been slow to respond to deteriorating economic conditions, denting investors' confidence in the country's ability to tackle the economic crisis.

The JPY dropped to 125.45 per EUR from 124.23 yesterday, and fell to 98.94 versus the Dollar from 98.02. Analysts say that the incoming data is likely to illustrate the vulnerability of the Japanese economy, and therefore the JPY is likely to remain weak, particularly as we head into end of the fiscal year. Also, the Yen is likely to weaken further since the Japanese authorities that a weak Yen is their intention. The Yen has slipped 11% since a 13 year peak against the Dollar in January as Japan's economy grapples with diving exports and its worst recession of the postwar era. Due to Japan's poor economic data, and the fact that the political situation remain uncertain, some investors predict a possibility of the JPY testing 100 level per Dollar very shortly.

OIL - Oil Prices Eye $50 a Barrel

Crude Oil prices jumped more than 3% to $47 a barrel yesterday on the news of Chinese vessels harassing a U.S. Navy ship in the South China Sea. The naval incident on Sunday, between the United States and China, the world's top Oil consumers, has boosted geopolitical tensions, adding to the pressure of a possible deeper production cuts by the Organization of Petroleum Exporting Countries (OPEC). The OPEC cartel agreed on a series of deep output cuts last year in an effort to stem the fall in prices, and next meets on February 15 to set output policy again. The Organization has implemented a reduction in output of 4.2 million barrels a day since September, equivalent to about 5% of global Oil demand.

OPEC Secretary General Abdalla el-Badri said on Monday that Oil prices at about $40 a barrel are not suitable, because this price level would not guarantee investment in future capacity beyond 2013. He also stated that the producers' group would study all options when ministers meet Sunday, though he declined to say whether a further production cut was being considered. Analysts forecast that in case OPEC decides to cut its production by 1 million barrels a day at its meeting, Crude Oil is likely to rise above $50 a barrel in the 2nd quarter of 2009.

Technical News

EUR/USD
A bearish cross has formed on the hourly chart, indicating a potential downward correction from the appreciation the pair has experienced today. The price of this pair also appears to be moving along the upper border of the daily chart's Bollinger Bands, signaling downward pressure may be applied later on today. Going short with tight stops may be the right trade.

GBP/USD
The 4-hour chart shows a bullish cross has formed, indicating a potential upward correction. This is supported by the chart's RSI which appears to be floating in the over-bought territory. Selling the pair may be the right play for short term traders. However the daily chart shows a violent breach of the lower Bollinger Band, signaling a possible upward movement. The daily chart also shows the pair trading in the oversold territory on the RSI. Traders who are bullish on the Pound may like this longer term strategy.

USD/JPY
After trading near the 99.00 resistance level, the pair is experiencing some downward pressure. A bearish cross has formed on the 4-hour chart's Slow Stochastic oscillator. The chart also shows the pair trading in the overbought region on the RSI. This indicates the potential for a downward price correction. The trading strategy is also supported as the daily chart's RSI showing the pair trading in the over bought region. Going short may be the right strategy for today.

USD/CHF
The pair is exhibiting strong short term bullish signals. The hourly chart shows both a bullish cross has formed on the Slow Stochastic and the pair is trading in the oversold region of the RSI. 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.

The Wild Card

EUR/GBP
We can see from the 4-hour chart that the pair may be oversold. The price of this pair appears to be floating in the over-bought territory on the chart's RSI and there appears to be a bearish cross on the Slow Stochastic, indicating a downward correction may occur soon. The pair has also made a violent breach its upper Bollinger Band. This may be a good opportunity for forex traders to go short today.

 

[forexyard]

Forexyard Analysis - NZ Poised to Slash Interest Rates; NZD Volatility Expected

With few economic indicators expected to be released today, all eyes have turned to the Reserve Bank of New Zealand (RBNZ) as it positions itself to cut short-term interest rates by an expected 50 basis points. New Zealand currently maintains one of the highest global interest rates, but with the global recession cutting deeper into every major economy, the gap between the different interest rates is steadily being reduced, further weakening each nation's currency.

Economic News

USD - USD Volatility to Heighten from Today's Market Anxiety

The Dollar was little changed against most of its major counterparts during yesterday's trading session. Traders awaited Federal Reserve Board Chairman Bernanke's speech yesterday in which he urged a sweeping overhaul of U.S. financial regulations in an effort to smooth out the boom-and-bust cycles in financial markets. The USD began to stabilize as a result, ending yesterday at 1.2693 against the EUR and 1.3767 against the GBP.

Bernanke recommended that lawmakers and supervisors rethink everything from the amounts firms set aside against potential trading losses and deposit-insurance fees to protections for money-market funds. His remarks reflected a judgment that the U.S., just like emerging-market nations in the past, failed to properly manage a flood of capital over the past decade and a half.

Optimism in global markets was fueled by a memo from Citigroup's Chief Executive which said the troubled banking giant was profitable in the first two months of 2009 and he is confident about its capital strength after tough internal stress tests. The investors took the comments as a sign of improvement for the overall economy.

As for today, a few data releases are 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 Crude Oil Inventory report which is expected to increase from its previous reading, signaling growth expectations in the largest energy consumer. Traders pay close attention to this figure as it has a moderate correlation with the value of the U.S. Dollar. Also today, the Federal Budget Balance 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 as a result.

EUR - Will the EUR Remain Bullish Today?

After a relatively negative news day, the EUR still managed to appreciate against most of its currency counterparts. The EUR gained about 100 points versus the Swiss Franc and closed at 1.4738. Against the USD and the JPY it mainly fluctuated within a small range.

The major economic event that came out of the Euro-Zone yesterday was the German Trade Balance, which was slightly lower than analysts had forecast. Exports from Germany dropped for a 4th consecutive month in January, pushing Europe's largest economy deeper into economic despair. Germany is battling its worst recession in more than 60 years as a global economic slump curbs exports, prompting companies to scale back output and eliminate jobs. The German economy has shrunk 2.1% this year alone, the most in more than 20 years, also marking the 3rd consecutive quarterly drop.

Looking ahead to today, the most important financial indicator scheduled to be released from Europe is the British Trade Balance. 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 continue to bolster the EUR in the short-term.

JPY - JPY Holds Recent Strength; Japanese Economy Continues to Sinks

The JPY saw bullish results against most of its major currency rivals. The JPY has predominantly been influenced by the other major currencies' behavior lately, as only one major indicator was published from Japan. The JPY ended yesterday's trading up at 98.53 against the USD, and has continued to hold these gains through today's early trading hours.

Core Japanese private-sector machinery orders fell for a 4th consecutive month in January, the longest losing streak in at least 20 years, as exports crashed and profits evaporated. Japan posted its first current-account deficit in 13 years in January, leaving companies with less cash to invest in plant and equipment. Companies' project profits will slide 86% this fiscal year, and exporters will bear the brunt of the decline.

Sentiment among Japan's largest manufacturers fell significantly in the last year, signaling that companies are likely to cancel spending plans and cut more jobs, pushing the economy further into recession and weakening the JPY.

Oil - OPEC Production Cut Expected Next Week

Crude Oil fell again yesterday, after an early jump above $48 a barrel, as the market anticipated OPEC's meeting on March 15th in Vienna. If OPEC decides to make another cut to oil production, prices are expected to firm up and move higher in a short-term.

Looking ahead today, one of the more influential pieces of economic data will be the U.S. Crude Oil Inventories report. This inventories report has become more and more relevant over the last few months as the movement of the price of Crude Oil has become a major market mover. Expectations show a rise of 0.1M barrels from last month's decrease of 0.7M barrels. Traders can, and should, expect wide market volatility around the 14:30 GMT release of these inventories figures because of Crude Oil's importance in today's market.

Technical News

EUR/USD
This pair appears to be leveling off as all oscillators are giving off neutral signals. However, the Bollinger Bands on the 4-hour and daily charts are beginning to tighten, indicating a volatile price move may occur in the near future. With the recent trend, and momentum, pointing in an upward direction, the volatile movement may be upward. Going long with tight stops might be a wise choice today.

GBP/USD
This pair's recent drop in value continues to hold the price in the over-sold territory on the RSI of the 4-hour and daily charts, signaling upward pressure. While the momentum appears to remain downward, we may likely see a number of upward corrections throughout the day. Buying on the lows and selling on the highs of these fluctuations will be a good strategy today.

USD/JPY
The sustained upward movement of this pair has begun to push the long-term oscillators, such as the daily chart's RSI, into the over-bought territory. This appears to be putting downward pressure on the price of this pair as it has begun to level off. As momentum shifts into a downward posture, going short with tight stops might be a good strategy.

USD/CHF
The price of this pair is floating near the upper border of the Bollinger Bands on the hourly and 4-hour charts, signaling moderate downward pressure. With the price currently floating in the over-bought territory on the hourly chart's RSI, the notion of a downward correction appears to be getting stronger. Going short with tight stops might be a wise choice today.

The Wild Card

Gold
The price of this commodity has entered the over-sold territory on the RSI of both the 4-hour and daily charts, signaling an upward correction may be imminent. The recent drop in price has fallen within the range of the up-trend which goes back to October of last year and has now reached the lower limit of that range. The bullish cross on the 4-hour chart's Slow Stochastic supports the notion that an upward swing may occur in the near future. Forex traders have a great opportunity to either enter the bullish reversal after the swing occurs, or wait for the trend to be breached and go short to ride out the downward slide which may occur shortly thereafter.

 

[forexyard]

Forexyard Analysis - Crude Oil Plunges over $2 a Barrel; USD Weakens

During yesterday's early afternoon hours, Crude Oil received a hasty sell-off when investors unwound their positions for riskier assets. With a recent boost to equity markets, the USD has also found itself losing strength to a number of its currency rivals, particularly the EUR. If this stock rally can continue, we may see these trends persist throughout the rest of the week.

Economic News

USD - Equity Gains Reduce Demand for the Dollar

The USD traded significantly lower yesterday against most of its major crosses. The heavy selling of the Dollar continued for the second day in a row as a rise in risk-taking was seen when global equity markets rose from a 12-year low. However, when U.S. equity markets began to drop in the late afternoon, the Dollar showed a bit of strength, though it was not enough to counter the influx of additional risk taking.

U.S. equities made their largest gains of the year two days ago, spurring the selling of the Dollar. Positive market sentiment will hurt the USD. This has been a leading trend in the forex market; a reverse correlation between the USD and a higher level of risk.

The EUR/USD rose to a session high of 1.2862 from yesterday's closing price of 1.2666. The GBP/USD also was higher at 1.3837 from 1.3789.

The USD may to continue to show weakness in the short-term. Economic forecasts for both U.S. unemployment numbers and retail sales are grim. The economic indicators are set to be released today at 12:30 GMT. While these two reports may make a big impact on today's trading, the indicators are lagging. Therefore, traders should not forget about the monthly Business Inventories. This data may shed a better light on U.S. economic trends. If the report misses forecasts, the EUR/USD may return to the 1.3000 mark.

EUR - German Manufacturing Data Plummets

A report released yesterday showed that German manufacturing orders tumbled in the month of January as the global economic slowdown took its toll on Germany's exports. The manufacturing industry saw orders plunge 8% in the month of January. The mark was more than 4 times below the forecasted value by global economists.

It is apparent that the global recession is having a catastrophic effect on the German economy. As other nations slope into a recession, Germany's reliance on exports to fuel their economy has triggered a massive slowdown. Germany is the European Union's largest economy and many view it as a gauge for pan-European economic performance. These reports could begin to impact the trading of the EUR.

Traders will be anxiously expecting monthly German Industrial Production figures today. The report may not be the one to set the trend for today's EUR trading, however high price volatility will be expected during the time of the report's release. Forex traders may want to look for a continuation of poor manufacturing data from Germany to perhaps sink the EUR during inter-day trading.

JPY - Better GDP Numbers Helps the Yen Rise

The JPY gained strength for the second day in a row and continued its gains into the Japanese trading session. The release of Japanese Final GDP came out better than expected. This helped to increase the bullishness of the JPY. The USD/JPY was trading lower near the 96.20 level early this morning.

The updated 4th quarter GDP numbers were greeted with cheers. Japan's economy has been one of the most negatively impacted economies during the global recession. Any sign of positive news could provide a boost to the Yen which has seen considerable weakness the past month. Traders may want to run with the bullish correction of the JPY today as this may continue with the release of poor U.S. economic indicators later today.

Oil - Higher than Expected Inventory Data Sinks Crude

The price of Crude Oil dropped sharply yesterday as the demand for the commodity continues to fall. U.S. Crude Oil inventories posted a sharp increase in the amount of Crude stocks in storage. The report failed to meet market expectations, helping to drive the price of Crude lower. At the end of the trading day, the price of Crude Oil held at $42.64. The price was down more than $3 on the day.

The lack of any price appreciation has market participants forecasting further production cuts by OPEC later this month. The cartel is next scheduled to meet on March 15th. However some skepticism remains if more supply cuts will have any affect on current Crude prices due to bleak demand forecasts for global economic growth. Many see the fair market value of Crude Oil trading in the range of $45-$50.

Technical News

EUR/USD
The recent upswing seen in this currency pair has the price floating near the upper border of the Bollinger Bands on the 4-hour and daily charts, signaling moderate downward pressure. The recent bearish cross on the 4-hour chart's Slow Stochastic adds weight to the notion of an imminent downward correction. Going short with tight stops might be a wise choice today.

GBP/USD
This currency pair is currently giving off mixed signals. With the RSI on the hourly chart showing the price floating in the over-bought territory, there may be a downward correction in the nearest future. However, with the price floating in the over-sold territory on the daily chart's RSI, the longer-term movement will likely be in an upward direction. Capturing the imminent downward correction and then riding out the uptrend may be a wise strategy today.

USD/JPY
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 to the recent downtrend may be imminent. There appears to be a bullish cross forming on the 4-hour chart's Slow Stochastic which supports this notion. Going long might be a good choice today.

USD/CHF
This pair appears to be consolidating to the price level of 1.1575 in anticipation of a volatile movement. The Bollinger Bands on all charts appear to be tightening, which supports this notion. With the RSI on the hourly and 4-hour charts hovering close to the over-sold territory, the sharp movement may be in an upward direction. Going long might be a wise choice today.

The Wild Card

USD/SEK
After the recent drop in value, the price of this pair appears to now be floating in the over-sold territory on the RSI of both the hourly and 4-hour charts, signaling an upward correction may occur in the nearest future. The recent bullish crosses on the 4-hour chart's Slow Stochastic heavily support this notion. As the Bollinger Bands on the hourly chart begin to tighten, a volatile upward correction may be occurring in today's early trading hours. Forex traders can take advantage of this imminent volatile movement by setting an early long position with tight stops.

 

[forexyard]

Forexyard Analysis - G20 Summit on Economy Kicks-Off Today

The finance ministers and central bankers from the top 20 industrialized nations are set to begin another economic summit today in which a multitude of recent concerns about the economy will likely be addressed. These meetings, which can last days, have an indirect impact on the market and decisions reached during its meetings are typically implemented at a much later date. It is important for forex traders to follow any statements made regarding stimulus packages and interest rate cuts, however, as these will offer insight into future monetary policy decisions by the central banks.

Economic News

USD - Dollar Moves on Stock Market Gains

The Dollar recorded an extremely volatile session yesterday as the American stock market made massive gains on Thursday. The Dow Jones climbed an impressive 240 points, or 3.5%.This was owed to a number of diverse factors, such as General Electric revealing that losing its AAA rating won't hurt the company, General Motors stating that it won't need government loans this month, and better-than-expected retail sales figures helped push-up stocks too. This led the Dollar to make big moves against its major currency crosses. Against some currencies it made gains, and against others, like the EUR, it recorded heavy losses.

The Dollar dropped 100 points against the EUR to close down at 1.2924 in yesterday's trading, as investors decided to take some riskier assets. The Dollar also made losses against the Pound. This is more likely to be a correction in the pair, as the Pound has lost a lot of ground against the greenback as of late. The British currency gained 50 points against the USD to close at 1.3918. The Dollar, however, recorded a 150 point gain vs. the Yen as it closed at 97.63.

Other news owing to the bullish U.S. stock market and the fall in the Dollar's value against the EUR yesterday was Bank of America, JP Morgan, and Citigroup reporting impressive figures, leading to more risk taking yesterday. If the trend continues, this will mark a turning point in the current recession. In turn, this would mean a lot for the forex market. Thus, investors would abandon the current safe-haven Dollar en masse and return to currencies such as the GBP and EUR. However, to be safe, the global economic situation should only be judged on a daily basis.

Today, we have some important economic data releases coming out of the U.S. before the weekend kicks in. There are the U.S. Trade Balance figures at 12:30 GMT and the Preliminary University of Michigan (UoM) Consumer Sentiment report at 13:55 GMT. Better-than-expected figures may push the EUR/USD rate up to the 1.3000 level by Friday's close. It is also advisable for traders to pay close attention to whether the Euro-Zone will reveal whether or not they will make rate cuts close to 0% in the coming months.

EUR - EUR Gains against Major Currencies

The EUR made notable gains against all of its major currency pairs in Thursday's trading. This comes about as the stock markets of the Euro-Zone made similar gains, much inspired by the rally on Wall Street. There was also a leap in confidence yesterday, as President of the European Central Bank (ECB), Jean-Claude Trichet, revealed that he will be very aggressive at tackling the economic crisis, more than many analysts had originally forecasted.

Trichet revealed that he plans on cutting the overnight lending rate to 0.5%. In the short-term, this has resulted in an increase in demand for the European currency. This recent news is likely to lead to much volatility in the coming weeks between the EUR and its main currency pairs and crosses.

The EUR gained 40 points against the British Pound in yesterday's trading to close at 0.9284. It nearly gained 300 points vs. the JPY to close at 126.24. This result is also owed to the stock market rally in Japan and the poor Japanese GDP figures, showing that Japan's economy shrunk by 3.2% in the 4th quarter of 2008, the worst figures since 1974. Against the Dollar, the EUR rose 100 points to 1.2924, as investors took up riskier assets.

Looking ahead to today, there is some important news coming out of the Euro-Zone. The German Wholesale Price Index (WPI) will be released at 7:00 GMT, and the Retail Sales figures are set to be released at 10:00 GMT. If these figures match expectations, the EUR is likely to build on yesterday's gains against its major currency pairs. There may be other factor's affecting the EUR's strength later today, such as investors profiting from current market conditions ahead of the weekend.

JPY - JPY Slides on Poor GDP Data and Stock Market Rally

The JPY slid in Thursday's trading owing to 2 factors. First, the recent publication of Japan's poor GDP figures showing that her economy shrunk by 3.2% in the 4th quarter of 2008, the sharpest fall since 1974. The second factor that led to the very weak Yen yesterday was the stock market rally in Japan, inspired by Wall Street. The Nikkei rose by over 300 points, or 4%, as investors dropped the safe-haven Yen. Shares such as Sony, Canon, and Japan's banking sector made notable gains. This was the push that Japan needed to show that there may be light at the end of the tunnel. Maybe we are seeing a turnaround in economic fortunes for Japan?

The JPY made large losses against its major currency crosses. Against the Dollar, the Japanese currency fell by 150 points to close at 97.63. The JPY dropped a massive 300 points vs. the EUR, as there was renewed confidence yesterday due to the Euro-Zone's fiscal policy, and the move away from less risky assets. The Pound also gained against the JPY by 250 points to finish yesterday's trading session at 135.93, reversing losses that the Pound made in recent days. Revised Industrial Production and Household Confidence figures may determine the JPY's strength in early trading today. However, as the day goes on, the Yen will be impacted more and more by developments coming out of the U.S. and the Euro-Zone.

Oil - Crude Oil Prices Soar $4 Higher

The price of Crude Oil for April delivery soared a dramatic $4 a barrel in Thursday's trading to $46.60. This comes about as ministers from the Organization for Petroleum Exporting Countries (OPEC) are set to meet this coming Sunday. Officials in Saudi Arabia and Libya revealed that there may be a decision on further production cuts at their next meeting. However, ministers from OPEC failed to go into detail. There is concern, however, about the destabilizing economic situation on Oil prices.

Throughout this week, Oil prices have continued to be volatile as the upcoming meeting for OPEC in Vienna approaches. On Wednesday, for example, Crude prices dropped dramatically, after a higher-than-forecasted storage of Oil that was published in the Crude Oil Inventories report in the U.S. It seems that these losses have now been overcome. We will have to wait until Sunday's meeting for the surprises that OPEC's oil ministers have for us.

Technical News

EUR/USD
The recent bullish trend is losing its steam and the pair seems to be consolidating around the 1.29 level. The hourly chart's RSI is already floating in the over-bought territory suggesting that the upward trend may see a bearish correction soon. When the downwards breach occurs, going short with tight stops appears to be the preferable strategy.

GBP/USD
The 4-hour chart is showing mixed signals with its RSI fluctuating in neutral territory. However, the daily chart's RSI is sitting 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.

USD/JPY
The typical range-trading on the hourly chart continues. Both the hourly 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/CHF
The daily chart is showing mixed signals with its Slow Stochastic fluctuating in neutral territory. However, a fresh bearish cross on the hourly chart's Slow Stochastic implies that a downwards correction might take place in the nearest time frame. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

The Wild Card

Crude Oil
Crude Oil prices rose significantly yesterday and peaked at $46.50 a barrel. However, the hourly chart's RSI is floating in the over-bought territory, suggesting that the recent upwards trend is losing steam and a bearish correction may be impending. This might be a good opportunity for forex traders to enter the new trend at a very early stage.

 

[forexyard]

Forexyard analysis - USD Losing Strength Ahead of Interest Rate Announcement

After depreciating consistently over the past few weeks, the USD is now traded over 1.29 against the EUR, and over 1.40 against the GBP. This week on Wednesday, at 18:15 GMT, the Federal Reserve will deliver an Interest Rates statement, and is widely expected to leave it on 0.25%. However, Bernanke's speech from yesterday might hint that a rates hike is no longer taboo. Such decision could create mayhem for the leading currencies, and forex traders must be prepared.

Economic News

USD - USD Propped-Up by this Week's Bullish Expectations

With a rally in stocks and other equity markets last week, traders witnessed a significant downtrend in USD pairs and crosses. Losing strength to almost all currency rivals, save the JPY, the greenback indeed suffered from this increase in risk appetite. Trading down against the EUR at 1.2926 last Friday, and also returning to the 1.4000 level against the GBP, the short-covering action on the USD inflicted some deep wounds to the American currency.

With few data releases helping or harming the EUR, the USD was likely losing strength from the unwinding of long positions on the Dollar in exchange for higher-yielding assets. In today's early trading sessions, the USD regained some of its lost momentum and is currently trading at 1.2886 against the EUR.

As European markets come online later on, the increased liquidity may in fact push the USD lower against the EUR as European indicators are forecasting a lack of any significant change, whereas the U.S. government will be releasing figures which are predicted to present relatively bullish results. Under normal circumstances the USD would receive a positive boost, but during these times of recession and financial crisis, positive figures may result in an increase to risk appetite; causing a turn of events similar to those of last week. The USD could turn around from this morning's gains and test the 1.3100 level by day's end.

Traders should be watching for today's release of Treasury International Capital's (TIC's) Long Term Purchases report, which is expected to indicate that demand for U.S. long-term securities has increased, most likely leading to a concurrent increase in demand for the USD. As interest in American securities increases, the value of the Dollar rises with it since investors must purchase these securities in USD. Whatever the outcome, today will likely see a sharp volatile movement in the value of the USD's pairs and crosses.

EUR - EUR Lacks Clear Direction; Will Euro-Zone Confidence Continue Weakening?

After a week of solid gains against many of its currency rivals, the EUR now appears to be leveling off, and in some instances weakening against other currencies. Last week's strength may actually have been attributed to an increase in risk appetite and therefore an unwinding of safe-haven USD positions, of which the EUR was the beneficiary. With neutral economic data emanating from Europe last week, this may indeed be the case. Ending the week up against the USD at 1.2926, and at 0.9228 against the GBP, the EUR made gains in its tug of war against its primary currency counterparts.

As economic suffering begins to build across Europe, the European Central Bank (ECB) is finding itself under greater pressure to reduce interest rates in an effort to stem the economic slide, as well as prevent a deflationary cycle from forming. With a multitude of countries comprising the European Monetary Union (EMU), it is less likely that further monetary easing can or will take place in the Euro-Zone, but a further reduction of interest rates is possible in the near future. With such a turn of events, the EUR is not likely to regain any mantle of strength in the coming days. As the USD leads the other currencies in making the market, EUR strength will most likely be attributed to an unwinding of Dollar positions, not from any inherent strength in the EUR itself.

Looking ahead this week, traders will see a series of data releases which would be foolish to ignore. Today's consumer pricing and inflationary information for the region may set the tone for the EUR this week, but the market-maker for this regional currency is likely going to be tomorrow's release of the ZEW economic sentiment reports from Germany and the broader Euro-Zone regional economy. If consumer confidence continues to decline, traders will likely see a reduction in interest rates happening much quicker, and potentially deeper than expected, and the EUR will continue to be sold off to fund safer investments. Without a strong vote of confidence this week, the EUR may be on the receiving end of a downward slump lasting through Friday.

JPY - Bank of Japan Desires Weaker Yen; Expect Monetary Easing?

After seeing a short rally from sudden USD-weakness, the JPY has now resumed its previous downtrend against many currency rivals. Ending last Friday at 98.01 against the USD and 126.43 against the EUR, the JPY has continued to weaken from the unpleasant economic situation which has been brewing in Japan these last few months. The Bank of Japan (BoJ) is scheduled to discuss another potential interest rate cut later this week, but with the lowest rate worldwide, a further reduction seems counter-productive.

The BoJ has made it clear that a weakened Yen is what they desire as it will help stimulate exports for this heavily trade-dependent nation. With further negative economic data set to be released this week, traders will likely see a continuation in the downtrend of the JPY through Friday.
Crude Oil - Output Cuts Claimed to Produce Results

The Organization of Petroleum Exporting Countries (OPEC) has recently claimed that their previous production cuts have begun to take effect and the price of Crude Oil has continued to hold strength. Finding support in the $40-50 price range, the price for a barrel of Crude Oil has finally stabilized, according to the cartel, and further production cuts will not be necessary since expectations are for demand to begin increasing by 2010.

Various accounts have been given for what a reasonable price for Crude Oil might be, and a few oil ministers from within the cartel are aiming for a price range near $70 a barrel. The expectation is for the price for Crude to hold within the current range until the recession begins to ease and demand picks back up. Once achieved, the price of Oil should climb back towards the $60-70 price range by early 2010. However, without accomplishing an economic turn-around, prices may drop once more and OPEC could consider a further production cut towards the end of this year.

Technical News

EUR/USD

On the 4 hour chart the moderate bullish price movement continues within the upwards channel which still has yet to be breached. The hourly chart is also joining that notion with the Slow Stochastic pointing to the continuation of upwards momentum. Next testing point should be around 1.2960. Going long appears to be preferable today.

GBP/USD

Since Friday's trading session the Cable recouped losses, appreciating from 1.3730, up to 1.4063. 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. Daily chart's oscillators also support this notion. Placing long positions might be a right choice for today.

USD/JPY

The pair is showing local bullish momentum on the 4 hour chart after a very violent drop to the 95.77 level. On the hourly chart however, the pair continues to trade within quite a wide range, while the Bollinger Bands are getting tighter indicating that possible breach out of range might be imminent. By now, it would probably be recommended to stay out of this pair until a strong and distinctive signal will appear

USD/CHF

The 4 hour and the daily charts indicating that the bullish trend has not yet said its last word as this currency pair is in the midst of a strong upward trend. However the hourly chart's RSI and Slow Stochastic indicators are pointing down. A preferable strategy might be waiting for a clearer signal on the hourlies.

The Wild Card

NZD/USD

It seems that the bullish momentum is back again as the carry trade pair is heading up with plenty of room to run. All of the technical oscillators on the hourly and the daily charts are giving a bullish signals and this pair's target today might be the 0.5300 level. This gives forex traders a great opportunity to rejoin the market at an excellent entry price.

 

[forexyard]

Forexyard Analysis - EUR/USD Hits Two Months' High

The European currency may gain further after Germany rebuffed a U.S. plan to increase fiscal stimulus to help pull the global economy out of recession. The fact the Euro-Zone nations avoided making any fresh commitments to extend spending, should encourage more investments in Europe and, as a result, to boost the EUR currency.

Economic News

USD - USD Hits 5 Weeks Low against the EUR

The Dollar pared losses against the EUR on Monday after the New York Federal Reserve Bank's manufacturing index fell to a record low in March, adding to worries about the U.S. economy. The USD experienced some gains, rising to $1.3000 from around $1.3055 yesterday, however it still remained down 0.9% during the trading session.

Moreover, economic data published yesterday imply that the U.S. recession is likely to deepen further. To give an example of the type of negative data emanating from the American economy, the Empire State Manufacturing Index had its worst showing since 2001! This is also a signal that economic difficulties are starting to spread from the financial sector into the mainstream economy. Investors will have to adapt themselves to the upcoming economic hardships as these changes will not rectify themselves within a short period of time.

Later today, there are several important economic data releases coming out of the U.S. The most important of these publications is the Building Permits indicator at 12:30 GMT. The release is expected to be lower than the previous figure, meaning the USD could continue a level of bearishness today. Traders should stay close to the market as there is a strong chance to capitalize on the fluctuations which will likely follow this release.

EUR - EUR Gains against Major Currencies

The EUR experienced a bullish trading session yesterday, as it appreciated against most of its major currency pairs. The 16 nation's currency hit a five-week high against the USD yesterday as gains in European stocks signaled investors' willingness to take on more risk.

A rise in Euro-Zone inflation last month helped push the EUR above $1.30 for the first time since Feb. 10 in early trading. A pledge by the G20 finance ministers during a weekend summit to double the resources available to aid emerging market economies also lifted spirits.

In addition, European Central Bank (ECB) President Trichet said last week that deflationary risks were negligible, even as he left the door open to another Interest Rate cut. The central bank, which expects inflation to average just 0.4% this year, has already reduced its key Rate by more than half since early October to a record low of 1.5%.

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

JPY - Yen Slides on Weakening Economy

The Japanese Yen completed yesterday's trading session with mixed results versus the major currencies. The JPY fell against the EUR yesterday, pushing the oft traded currency pair to 1.2171. The JPY experienced similar behavior against the GBP as the pair rose from 137.50 to 138.50 by days end.

The Yen's safe-haven appeal has, however, lost some of its luster due to a rapid deterioration in Japan's economy, with the trade balance falling into deficit, and political uncertainty with an unpopular government facing an election that must be held by October. The Bank of Japan is seen likely to keep Interest Rates unchanged at 0.10% at a two-day policy meeting that ends on Wednesday. The BOJ is also expected to discuss whether to raise its purchases of government debt but market players are unsure if the central bank will make such a move at this week's board meeting. The Bank may be forced to increase purchases of government bonds if the country's economic slump deepens suddenly or banks start to fail, moving closer to a quantitative easing policy it has been trying to avoid.

OIL - Crude Oil Prices Soar $3 Higher

The Crude Oil's gains on Monday were helped in part by an early rally in U.S. and European stock markets on growing confidence in the banking sector, which outweighed Organization of the Petroleum Exporting Countries (OPEC) decision not to cut production target further.
The cartel which met on Sunday, decided not to cut output further, but rather concentrate on existing cuts that total 4.2 million barrels per day since September. Some analysts said OPEC's adherence to the existing cuts might be enough to offset falling demand and reverse the recent increases in oil inventories in many countries, including the world's largest oil consumer, the United States. However, in light of U.S grim economic data which confirms that long recession in the world's largest economy is far from over, the Crude might fall below $47 giving up its previous session's gains.

Technical News

EUR/USD

It appears that the bullish trend may have run out of strength as the current price level pushed the pair into the overbought territory on the daily chart's RSI, indicating that a downward reversal may occur later today. The hourly chart's Slow Stochastic also appears to be showing an imminent bearish cross, which supports this notion. Going short with tight stops might be the right choice today.

GBP/USD

A bullish formation on the daily chart is still intact; however the momentum is already quite low. The 4 hour chart is maintaining a slightly bearish indication yet with no distinct conclusion. Also, there is a bearish cross forming on the hourly chart, indicating that the bearish signal is in place. Traders are advised to hold for the breach and then swing into it.

USD/JPY

The pair is continuing to provide mixed results, and is now trading around the 98.70 level. The hourly chart demonstrates a flat line ever since yesterday. However, the weekly chart's Momentum oscillator still shows steep downward pressure. Traders are advised to wait for clearer indications on the hourly level before joining the trade.

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 distinct direction. On the other hand, range-trading behavior, allows traders to cut profits from buying on dips and selling on highs.

The Wild Card

USD/SEK

After the recent drop in value, the price of this pair appears to now be floating in the over-sold territory on the RSI of both the hourly and daily charts, signaling an upward correction may occur in the nearest future. The recent bullish cross on the 4-hour chart's Slow Stochastic heavily supports this notion. As the Bollinger Bands on the hourly chart begin to tighten, a volatile upward correction may be occurring in today's early trading hours. forex traders can take advantage of this imminent volatile movement by setting an early long position with tight stops.

 

[forexyard]

Forexyard Analysis - U.S Interest Rate Announcement on Tap

The technical correction continues to dominate the leading currencies, as both the EUR and the GBP have strengthened significantly against the Dollar lately. This could change today as the U.S Funds Rate will be announced at 18:15 GMT, and is forecasted to stay at 0.25%. However, any change that might take place is prone to sow disorder in the market, and forex traders should be ready for it.

Economic News

USD - Dollar Moves on U.S. Housing Market Data

The Dollar recorded a volatile trading session on Tuesday after U.S. data showed that the construction of new houses increased by an unexpected 22%. In some cases in Dollar trading, this positive news went against the greenback, as many investors feel that the news indicates a bottoming out of the housing slump in America. The reason why this is so critical is because the roots of the current U.S. and global financial crisis lie in the U.S. housing bubble, which burst after over 10 years of bullishness. These positive figures also led to a rally on Wall Street.

The Dow Jones climbed by nearly 180 points or 2.5%. The main gainers on Wall Street were housing and banking stocks. For example, J P Morgan, Citigroup, and Bank of America shares increased due to recent figures showing that all 3 companies were profitable in the first 2 months of this year. This led to the Dollar's failure to gain a strong bullish momentum against the EUR yesterday. This was due to the possibility that the beginning of the end of the current financial crisis in the U.S. has arrived. Therefore, demand for the greenback has started to sway, as demand for safe-haven currencies diminishes when economic times are good.

The Dollar fell against the EUR to eventually close down 42 pips at the 1.3046 rate. The Dollar closed up 14 pips against the JPY at 98.44, as the JPY also lost some of its safe-haven status, as the Japanese economy continues to deteriorate. The Dollar made more inroads against the GBP to close up 81 pips at 1.4041. This comes about as investors preferred to keep their money in the Dollar over the fragile Pound, which is dependent on the unstable British banking industry and energy sector.

Looking ahead to today, there is likely to be high volatility in the Dollar's currency crosses. This is so, as traders weigh-up on what's next for the U.S. economy. Traders are advised to follow the U.S. Current Account figures at 12:30 GMT, the Federal Open Market Committee (FOMC) Statement and the Federal Funds Rate at 18:15 GMT. Positive economic figures and an increase, or unchanged U.S. Interest Rate may lead to a rally on Wall Street, leading to a bearish Dollar in trading later on today as investors eye risk taking.

EUR - EUR Climbs Against Dollar

The EUR climbed against the Dollar on positive Euro-Zone figures, and a rally on Wall Street. German ZEW Economic Sentiment was better than expected at -3.5. The Euro-Zone recorded better-than-expected ZEW Economic Sentiment figures of -6.5 too. Both of these data releases helped push the EUR up against its other major currency pairs. Later on, this was helped when the U.S. released better-than-expected figures showing that construction of new houses was up 22% in February from January. This led to a rally on Wall Street, and a bullish demand in predominantly housing and banking stocks.

The rally on Wall Street helped in the drop in demand for the safe-haven U.S. Dollar vs. the EUR. Therefore, the EUR finally closed up 42 pips against the Dollar at 1.3046. The EUR also closed up against the Yen by 58 pips at 128.44. This comes about as the JPY loses some of it safe-haven status, and the EUR returns to the forefront. The EUR finished yesterday's session up by 82 pips against the Pound at 0.9288. This came about ahead of today's British Claimant Count Change at 09:30 GMT that is expected to show poor figures, as Britain's economy continues to deteriorate.

Today, there is plenty of news that is expected from Britain and the Euro-Zone, which is likely to affect the main currency crosses pairs of these respective currencies. However, 2 of the most important data releases will be coming out of Britain later today. At 09:30 GMT, there is the release of the Monetary Policy Committee (MPC) meeting from the Bank of England (BoE) in regard to future rate cuts. Additionally, at the same time there is the release of the British Unemployment Rate figures. These 2 data release may help determine the GBP's currency crosses going into end-of-week trading.

JPY - JPY Tumbles on Japanese Banking Plan

The JPY tumbled on Tuesday against most of its main currency counterparts on renewed plans for a Japanese banking stimulus and U.S. housing data. Firstly, U.S. housing data showed better-than-expected results. This led to a drop in demand for safe-haven currencies, such as the JPY and USD. Additionally, forex traders are dissuaded on putting big sums of money in the Japanese currency as Japan's economy is scheduled to shrink by 13.1% this quarter. The Bank of Japan (BoJ) concludes their 2 day meeting later today, and it is expected that they are going to unveil an aggressive plan to tackle the Japanese recession. This is in coordination with Japan's government, which is scheduled to push through the 3rd stimulus through Japan's parliament of over $2 billion for Japan's banks.

The leaks from the BoJ yesterday that it will continue lending large amounts of money to banks led to a rally in Japan's stock market. This was also spurred by the stock market rally on Wall Street. These events led to a higher risk appetite in Japan, and therefore a bearish Yen. The Yen closed down 14 pips against the USD at 98.44. This is significant, considering both currencies are safe-haven and usually show little volatility when trading against each other. The JPY rose against the Pound, as traders preferred the Japanese currency over the unstable British economy. However, against the EUR, the JPY closed down about 60 pips at 128.44. Today, Traders are advised to make their trading decisions in regards to the Yen on the conclusion of the BOJ Press Conference.

Crude Oil - Crude Oil Hits $50 Mark

Crude Oil prices jumped a staggering $2 yesterday, hitting $50.55 a barrel, before closing at the $49.45 price level. This was owed to the good news coming out of the U.S. that the construction of new houses was up a better-than-expected 22% in February from a month earlier. This signaled to investors that the worst of the U.S. housing crash and recession was over, and that a recovery is in sight. Automatically, investors took advantage of this, leading to the bullish Crude prices.

The dramatic increase in Oil prices comes on the back of an OPEC meeting last Sunday, which was pessimistic about a global economic recovery. Ministers concluded at this meeting that they will delay any further supply cuts in Oil. In the coming days, Oil may climb further if the U.S. releases more positive economic data releases. Additionally, if the Crude Oil Inventories figures at 14:30 match forecasts or are better-than-expected, then Crude prices may hit $54 by the end of today's trading.

Technical News

EUR/USD

There is a very accurate bullish channel formed on the 4 hour chart, as the pair is now floating in the middle of it. Currently, a bearish cross on the daily chart's Slow Stochastic implies that a bearish reversal is imminent. Going short appears to be the right choice today.

GBP/USD

The cable has dropped over 200 pips in the last two days, and after peaking at 1.4205, it is now traded at 1.3960. The 1-hour chart shows that the RSI has reached the over-bought zone and has dropped straight down, suggesting that a downtrend might take place. A drop beneath the 1.3880 level might validate the bearish move.

USD/JPY

Lately, the pair has been trading within a restricted range, without making any significant breach. And now, a doji formation on the daily chart suggests that a sharp move is impending. With all oscillators pointing up, it appears that going long might be the preferable choice today.

USD/CHF

It appears that little by little that pair has lost strength over the past few days, as it is now testing the 1.1800 level. A bearish cross on the daily chart's Slow Stochastic implies that the down trend could even deepen today. Going short with tight stops could be a good strategy today.

The Wild Card

Gold

Gold prices have dropped quite significantly over the past 4 days, and an ounce of gold is currently valued at $911.50. And now, the 4-hour chart shows that the current price has dropped beneath the Bollinger Bands' lower boarder, suggesting that a sharp bearish move is impending. This might be a great opportunity for forex traders to join a very popular trend.

 

[forexyard]

Forexyard Analysis - Sudden USD Weakness Shakes the Market

Investors fled the USD en masse yesterday after the U.S. Federal Reserve stated that it would begin quantitative easing - basically printing money - in order to revive the U.S. economy hopefully by the beginning of next year. After such a devastating loss in value, traders now have the opportunity to discover a new range for the value of the USD and will begin to do so throughout the rest of this week. Once stabilized, the USD may in fact begin to climb back up as it returns to safe-haven status in the coming weeks.

Economic News

USD - Dollar Plunges on Federal Reserve Plan

The greenback dropped on Wednesday, hitting a 2-month low against the EUR on speculation the Federal Reserve is debasing the U.S currency. The Fed has said that it will buy $300 billion of long-dated U.S. Treasuries over the next six months to boost the U.S. economy, thus contributing to the Dollar sell-off. As a result, the USD may extend further losses as the Fed is preparing to flood the market with Dollars. This move is likely to diminish the appeal of the Dollar as a safe-haven and lead to further weakness of the U.S currency; it might slide to $1.37 per EUR in the upcoming days.

The Dollar was traded at $1.3485 per EUR yesterday, after depreciating as much as 3.6%, the biggest intra-day decline since September 2000! It earlier reached $1.3535, the weakest seen since Jan. 9th. The USD has also weakened 2.4% against the JPY, falling to 95.69 Yen, and against the British Pound Sterling down 1.2% to $1.4224, in yesterday's trading. The surprisingly strong move by the Fed comes after central banks in Britain, Japan and Switzerland have embraced some form of quantitative easing, the process of flooding the banking system with funds to promote lending when interest rates are already at zero.

The Federal Open Market Committee (FOMC) said in its statement yesterday that the central bank will buy longer-term U.S. government debt and purchase an additional $750 billion of agency mortgage-backed securities, in a policy known as quantitative easing. In its statement at the conclusion of its 2 day policy meeting, the Fed indicated that it is more pessimistic about economic outlook. Officials removed language saying they expected the economy to recover later this year.

However, some analysts have said that the Dollar weakness may not last long given the worsening economic conditions throughout the world. In their view, the Dollar will continue to be seen as the safest store of value at this time of contracting global growth and its role as a funding currency outside of Europe will lend it support during the crisis. The return of investor risk aversion and all the major central banks embracing quantitative easing will cause safe-haven seeking flows to resume and may push the U.S. dollar higher back toward its long-term fair value of $1.20 this year.

EUR - The EUR Rallies as a Result of Dollar Weakness

Yesterday, the EUR rose the most against the U.S. dollar in almost nine years, after the U.S. Federal Reserve said it will buy government debt, while the European Central Bank (ECB) has remained reluctant to match the Fed's steps. The EUR traded at $1.3493 rising as much as 3.7%, its biggest intra-day advance since 2000.

Analysts say that traders should expect the EUR to keep overshooting for now with the EUR/USD back toward $1.40. The EUR also jumped to its highest in three months against the JPY, climbing above 130.00 Yen. The ECB President Jean-Claude Trichet has said that the central bank is studying at the moment whether to take complementary measures that won't necessarily be the same as other central banks; the bank's benchmark rate is at 1.5% compared with 0.1% in Japan and as low as zero in the U.S. Economists expect that the ECB will now have to react rapidly to the Fed's monetization of government debt by also embracing quantitative easing with an announcement likely as early as the ECB's next meeting at the start of April.

The EUR also advanced versus the British Pound to its highest level in 7 weeks to 94.16 pence, after a government report showed unemployment increased in February at the fastest pace since at least 1971. The market is still very much concerned about the British economy and that there'll be more problems in the housing and banking sectors, analysts have said. The U.K economy will probably contract into next year after most of the Group of Seven (G7) economies begin to recover, economists predict.

JPY - Yen Remains Weak as BoJ Holds Rates Unchanged

The Bank of Japan (BoJ) said it would increase its purchases of government bonds from banks by nearly a third, pumping cash into the economy to help ease the worst recession since World War II. The central bank kept interest rates unchanged at 0.1% Wednesday, but also forecasted that the economy would remain under stress in the new fiscal year and said that substantial liquidity is required to ensure stability in financial markets.

The Yen-selling was limited, however, with repatriation by Japanese investors ahead of the fiscal year-end at the end of this month preventing the currency from falling too much. Against the EUR, the Yen steadied but remained weak, with the EUR staying close to an earlier 11-week high of 128.83. Against the Dollar, the JPY was up significantly trading around 95.50, after the USD dropped in value following announcements by the Fed about quantitative easing. The BoJ said overnight it was holding interest rates steady at 0.10% and increasing its outright buying of Japanese government bonds to 1.8 trillion Yen ($18.28 billion) per month from 1.4 trillion Yen. Yet the JPY showed little reaction to this news, as other central banks, notably in the UK and Switzerland, have already announced aggressive monetary easing measures.

Crude Oil - Crude Oil Prices Reverse Losses

Crude Oil prices rose more than 2% to above $50 a barrel on Thursday, after a surprise move by the Federal Reserve to buy government bonds revived hopes the battered U.S. economy could soon begin its recovery. Oil's rebound was also supported by a sharp drop in the USD, which posted its largest percentage drop since 1985, as the Fed's move, aimed at resuscitating lending, prompted a sharp fall in market interest rates.

The U.S. Federal Reserve on Wednesday stunned markets by announcing it would pump another $1 trillion into the ailing U.S. economy by buying long-term government debt for the first time since the 1960s, and by expanding its purchases of mortgage bonds. Still, analysts cautioned that a continued weakness in Oil demand could limit Crude's gains in the near term. Slowing demand and rising inventories have helped drag Crude Oil off record highs over $147 a barrel struck in July as the economic meltdown hit consumption across the globe. But oil prices, which sank to levels below $35 last month, have since stabilized in the $40-$50 range, as the Organization of Petroleum Exporting Countries (OPEC) cut output by 4.2 million barrels per day and vowed on Sunday to achieve stricter enforcement of existing curbs.

Technical News

EUR/USD

After an exceedingly volatile price-spike yesterday, the price of this pair has remained floating in the over-bought territory on the RSI of every chart, signaling that a downward correction may occur in the coming hours. With fresh bearish crosses on the 4-hour and daily charts' Slow Stochastic, this move may indeed be imminent. Going short with tight stops might be the right choice today.

GBP/USD

The price of this pair appears to be floating in the over-bought territory on the hourly chart's RSI, indicating a downward correction may happen in the nearest future. However, a fresh bullish cross on the hourly chart's Slow Stochastic signals the opposite. Today it may be wise to wait for a more clear direction before entering this pair.

USD/JPY

Yesterday's volatile downward movement has pushed this pair into the over-sold territory on the RSI of both the hourly and 4-hour charts, signaling an upward correction may occur shortly. The violent breach of the lower border on the Bollinger Bands of all charts also signifies upward pressure. Going long might be a wise choice today.

USD/CHF

This pair has recently witnessed a sharp downward movement and has since begun to stabilize within a new range. The price of this pair remains floating in the over-sold territory on the RSI of the hourly and 4-hour charts, signaling that there may still be room for an upward correction. The recent bullish cross on the 4-hour chart supports this notion. Going long might be a wise choice today.

The Wild Card

NZD/USD

This pair has been giving off relatively clear signals about its upcoming movement. With the price floating in the over-bought territory on the RSI of all charts and a fresh bearish cross on the daily chart's Slow Stochastic, there appears to be an imminent downward correction in the making. Forex traders have the opportunity to join this impending move at an early entry point for a chance to earn great profits.

 

[forexyard]

Forexyard Analysis - Bernanke Speech to Impact Dollar

Today, U.S. Federal Reserve Chairman Ben Bernanke is scheduled to speak at 16:00 GMT. Whatever the content, the Dollar is likely to record a great amount of volatility as a result of Bernanke's speech.

Economic News

USD - Dollars Tumbles on Increasing Money Supply

The has continued its weekly demise this week , as it reached close to a two month low against the EUR on Thursday. The greenback also saw significant downtrends against the GBP and the JPY as well. The Federal Reserve's decision to expand the supply of Dollars by buying government debt, which was announced 2 days ago, is continuing to severely damage the U.S currency. Yesterday the USD lost a staggering 200 pips against the EUR to close at 1.3659. Against the JPY, the Dollar dropped a staggering 150 pips or 1.5% to close at 94.55. The Dollar's losses against the Pound were notable, as the greenback lost nearly 300 pips on Thursday to close at the 1.4489 level.


In general it can be said that the Federal Reserve's decision has had two different effects, both weakening the Dollar. Firstly, the Fed's actions were received quite enthusiastically among analysts across the world, which had an instant reaction among investors that now have more confidence that the U.S will manage to pull out of the current recession. Thus, as was proven recently, good news for the U.S economy signifies even better news for the rest of the western world, as these countries rely greatly on U.S consumption. The second effect is, as was described above, is a process in which the supply of Dollars increases, and thus makes the USD more available and cheaper in the long-term.

The other important factor that added to the Dollar's misfortune yesterday was the release of U.S Unemployment Claims data. Despite being slightly better-than-expected figures of 646,000 individuals filed for unemployment insurance during the past week, as opposed to the expected 652,000 individuals, these figures are still very disappointing. The next publications of this indicator could be the leading measurement of the U.S. economy's condition, and prospects for recovery. Traders are advised to follow it very carefully when it is published at 12:30 GMT next Thursday.

Looking ahead to today, the only significant event on the U.S calendar is the speech of the Federal Reserve Chairman Ben Bernanke, which is expected to take place at 16:00 GMT. After the reaction to Bernanke's announcement from 2 days ago, traders cannot afford to overlook his speech today, as it could impact the market dramatically once again. The result of the speech may incite a modest correction to the last days' trends in USD weakness.

EUR - EUR Soars vs. the Dollar

The EUR continued its bullish rally yesterday. The EUR saw its most dominant uptrend against the USD, as the EUR/USD reached over the 1.37 level, to eventually close up 200 pips at the 1.3659 level. Against the JPY, however, it finished yesterday's trading session virtually unchanged at 129.15, as the Yen continues to uphold its value. The EUR did gain over 50 pips vs. the British Pound to close at 0.9423, as the EUR/GBP pair heads for parity yet again.


It appears that the European Central Bank's (ECB) reluctance to match the Federal Reserve plan to rescue the Euro-Zone economy by buying government's debt is one of the main factors that have led to the European currency towards such high ranks against the leading currencies. However, it is widely accepted that the ECB won't be able to sustain the public demand for a rescue plan, and will soon launch a plan of its own. The plan will probably be more modest than the American one, but could have similar effects on the European currency.

A significant economic rescue plan for the Euro-Zone economy may lead to the current bullish trend in the EUR reaching its end much sooner than expected. Traders should stay extremely alert in the coming days and weeks, as an opportunity to profit from a reversal in the EUR's fortunes, spurred by the case that the ECB will indeed announce its desire to implement a rescue plan might be a rare opportunity to catch a trend in its first steps. Therefore, forex traders may be able to make large profits by employing this trading strategy.

As for today, a batch of data is expected from the Euro-Zone. The most significant indicators will be the German Producer Price Index at 07:00 GMT, which is expected to drop by 0.2% as opposed to the previous month. The European Industrial Production figures at 10:00 GMT is expected to drop by 3.8% from the last publication. If forecasts will indeed come true, traders might witness a relatively bearish trading day for the EUR. However, it is advised to follow economic news coming from the U.S., as this may change the course of trends today

JPY - Yen Climbs Against the Dollar

The Yen soared against the Dollar yesterday, mainly as a result of the weakening USD, and not as a result of high demand for JPY. The Dollar's weakness was largely owed to the Federal Reserve's decision to keep Interest Rates near 0 at 0.25%, and announcing a mass buying of debt, by dramatically increasing the Dollar supply. The Yen's strength is also owed to the Bank of Japan's (BoJ) extremely pessimistic line by stating that Japan's economic conditions have deteriorated significantly, and are likely to keep worsening. In other times, such a saying would have generated a massive bearish trend for the JPY, but as of late, it appears that all the currencies will appreciate against the Dollar without any relevance to their local economic conditions. In the long-term, if the BoJ will continue with its desire to see a weak JPY, the Yen is very likely to depreciate over time, and traders should take this under consideration.

The JPY saw mixed results against the major currencies in yesterdays trading. The JPY rose against the USD by a dramatic 150 pips or 1.5%, as the USD/JPY cross reached as low as the 93.53 level, before finishing at the 94.55. The Yen lost 60 pips against the GBP to close at 137.01, reversing some of the GBP's losses against the Japanese currency. The EUR/JPY currency cross finished Thursday's trading session virtually unchanged to close at 129.15, as both currencies made significant gains against the greenback. As for today, Japanese banks will be closed in observance of Vernal Equinox Day. Traders are advised to follow the economic news coming from the leading regions, such as the U.S., Euro-Zone and Britain.

Crude Oil - Crude Oil Hits the $52 Level

Crude Oil rose to over $52 yesterday, before closing at $51.39, an increase of 150 pips or 3%. This marks a massive weakly gain for Crude Oil of about 13%. This is largely owed to signals of a possible economic recovery from the U.S. It appears that OPEC's unusual high level of discipline, is one of the other reasons for the high value of Crude Oil. OPEC managed to keep up to their estimations of the right amount of barrels produced per day, and as a result managed to halt the ongoing erosion in Oil prices.

High Crude prices are also owed to the significant drop in the Dollar. Thus Crude Oil is valued in Dollars, and as such, any downtrend of the USD is likely to generate a bullish trend for Oil. As for today, traders are advised to follow economic data, especially from the U.S, and even more importantly, follow the USD's movements against the leading currencies, in order to predict Oil's trend for today. If the Dollar will continue to slide, Crude Oil might reach $55 a barrel before the week ends.

Technical News

EUR/USD

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. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

GBP/USD

The bullish trend is loosing its steam and the pair seems to consolidate around the 1.4460 level. A bearish cross on 4-hour chart's Slow Stochastic implies that a downwards correction might take place in the nearest time frame. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

USD/JPY

The 4-hour chart's is showing that the pair is still in the bearish configuration. However, the RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

USD/CHF

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

The Wild Card

Gold

Gold prices rose significantly in the last two days and peaked at $956 for an ounce. However, there is a bearish cross on the 4- hour chart Slow Stochastic 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 - A New Valuation for the Dollar

The announcement of a quantitative easing program by the Fed sent the Dollar dramatically lower against the major currencies. Traders may look to compound on the large price adjustment as short term forecasts are predicting further weakness in Dollar denominated pairs.

Economic News

USD - USD Strength Not Likely to Return this Week

Last week's decision by the Federal Reserve to buy up U.S. Treasury securities has generated one significant result: an across-the-board sell-off of the USD. Jumping an unprecedented 334 points against the EUR directly following the announcement last Wednesday, the Dollar has continued to take hits through the end of last week and today. Two primary results occurred as a result of this sell-off. The first, as was just mentioned, was a volatile decreasing movement in the Dollar's pairs and crosses. The second was a subsequent rise in the value of commodities like Crude Oil, which hasn't seen such an upward movement since September.


With the global economy worsening consistently over the previous few months, major economies, such as the United States, are taking whatever measures they can to salvage their economic systems before a collapse takes place. One investment maneuver undertaken by many traders during economic hard times is to invest in a safe-haven currency, like the USD. This explains the influx of Dollars being purchased over the preceding months, which likewise drove the value of the USD to an inflated high. One perception of the recent turn of events might state that the USD is not crashing down or weakening, but rather, returning to its more realistic value.


One thing many forex traders can be sure of is that the downward movement of the USD is not likely to cease in the short-term. At the moment, the U.S. Federal Reserve is basically printing almost $1 trillion worth of new currency. Regardless of any speculation about future price levels, the present moment dictates that the greenback must come down, at least for now. The economic calendar might lend some strength to the USD in the form of potentially positive housing data, however. Could this information be enough to prevent the continued fall of the Dollar?

EUR - Will the EUR Hold its Recent Gains?

A bullish EUR appears to be the order of the day lately. After the U.S. Federal Reserve announced its quantitative easing program, the EUR climbed to a high not seen in months against its primary currency rival, the USD. Shooting above the 1.3700 mark last Thursday and Friday, the pair appears to have settled down slightly at the beginning of this week starting with a small increase in value from 1.3582 to 1.3656 so far. Against the Pound, the EUR has also seen some small gains in today's early trading hours; currently trading at 0.9416.


While many analysts anticipate the USD to grow significantly weaker in the coming days, there is also talk of similar quantitative easing strategies being implemented in the Euro-Zone by the European Central Bank (ECB). If such a move were to be taken by the ECB there is a possibility of a mad dash to sell-off the EUR similar to what occurred to the USD last Wednesday. Could there be a race to the bottom between these 2 currencies?


Most importantly this week, traders are going to see a sizeable amount of economic data from the Euro-Zone, primarily on Tuesday with the announcement of multiple French and German manufacturing and production figures. If we see a continuation of negative data from this region, there is a high possibility of the Euro-Zone implementing measures similar to what the Fed did for the U.S. economy. If this happens, expect the EUR to put a halt to its recent gains, and most likely reverse against most of its pairs and crosses by sometime this week or next.

JPY - Yen Weakness Prevalent at the Start of this Week

The JPY has seen some odd behavior this past week. Appreciating against the USD directly after the announcement of the Fed's new quantitative easing program, the JPY actually lost value against most other currencies. This highlights two important analytical points. First, the USD's recent weakness is due to the Fed's program and not a coincidental strengthening of other currencies. Second, the JPY is in fact weakening as a result of monetary policies undertaken by the Bank of Japan (BoJ) recently.


Trading up at 96.38 against the USD, and down at 131.82 against the EUR, the JPY may actually begin to post steady losses throughout this week due to recent actions by the BoJ to lower the value of the Japanese currency in an effort to boost exports. A steady release of economic figures this week may demonstrate the inherent weakness of the JPY and thus push its value lower against all currency pairs, or it could show that the Japanese economy is beginning to rebound and thus spark a trend reversal for the Yen. Only time will tell.

OIL - Oil Rises beyond $50 a Barrel; Upward Movement to Continue?

As part of the weakening USD seen last week, the price of Crude Oil has seen a corresponding increase in value. The price for a barrel of Crude Oil climbed above the $50 mark last Friday and appears to be continuing in an upward direction. No doubt the quantitative easing taking place in the U.S., thereby weakening the Dollar, has carried an impact on the price of this commodity since it is traded in Dollars.


Secondly, the price for a barrel of Crude Oil is affected by supply as much as it is affected by the strength of the USD. With production cuts beginning to take effect, the Organization of Petroleum Exporting Countries (OPEC) has declared that Crude Oil prices appear to be stabilizing and may return to a more suitable price level in the nearest future. As long as the USD continues to weaken and equity markets remain in a somewhat bullish posture, the price for a barrel of Crude is not likely to go south anytime soon.

Technical News

EUR/USD

After touching a base at 1.3724, the pair now is consolidating a bit higher near the 1.3680 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.

GBP/USD

The Cable has resumed its bullish trend and is attempting to breach the 1.4585 level. Should the breach take place, the pair might further extend its bullish run, with a potential price target of 1.4620.

USD/JPY

It seems that the pair has limited its bullish correction after testing the 98.94 level. Currently a bearish cross took place on the hourly chart's Slow Stochastic. The resumption of the bearish trend looks possible. Going short with tight stops might be the right strategy today.

USD/CHF

The pair's movement is quite moderate and characterized a slight bearish move. Indicators on the 4 hour level shows mixed signals, as the daily studies are still a bit bearish. Waiting for a clear signal on the hourly level before entering the market might be wise.

The Wild Card

NZD/USD

The pair is in the middle of a strong bullish move ever since it peaked at 0.5283, and is now traded at 0.5663. The pair continues its nonstop upward journey overlooking every possible support level and shows no sign of a stop. All oscillators on the daily chart are still bullish and the trend appears to have more room to run. Forex traders should note that being long on the pair appears to be a wise move for the day.

 

[forexyard]

Forexyard Analysis - U.S. Toxic Debt Plan Spurs Market Optimism

U.S. Treasury Secretary Timothy Geithner unveiled plans last week for a public-private partnership of investors buying out toxic banking and housing debt. Since that time, investors have been in a frenzy to sell off the USD and buy into various private investments, creating a rally on Wall Street, and intense volatility in the forex market. The recent make-or-break attitude of forex traders has generated such volatility that it could bring many investors back into the fold in order to capture profits from the large price swings which have occurred.

Economic News

USD - Dollar Moves on U.S. Banking Plan

The Dollar recorded a volatile trading session as the U.S. Treasury Secretary Timothy Geithner unveiled plans for a public-private partnership to buy the toxic debts of U.S. banks. In effect, Geithner's speech led to a rally on Wall Street that resulted in a 7% rise in the Dow Jones and other indices. The other big factor that helped spur a rally on Wall Street was better-than-expected U.S. housing data. This showed a 5.1% increase in Existing Home Sales from January to February. As a result, the Dollar cut its losses that it made earlier on in the trading session against currencies such as the EUR.

The Dollar ended yesterday's trading session with some mixed results against its major currency crosses. The Dollar closed down 9 points against the EUR to 1.3654. The Dollar gained 139 points against the Japanese Yen, as the USD/JPY rate approaches the 100.00 mark again. However, against the British Pound, the Dollar made some big losses. The USD dropped about 170 points to close at 1.4683 against the GBP. This comes about as Britain's stock market and currency reacted very positively to the banking plan from the U.S.

Looking ahead to today, there are a number of economic news events and data releases coming out of the U.S. The House Price Index (HPI) and Richmond Manufacturing Index are set to be released at 14:00 GMT, and will be the two of the biggest indicators from the States. However, the news event that may have a very large impact on the Dollar and its main currency pairs in today's trading is Federal Reserve Chairman Ben Bernanke's speech around the same time. This speech is very important as he well be testifying with Timothy Geithner about the controversial American International Group (AIG) bailout. Traders are advised to watch closely, as this may lead to great volatility in Dollar trading.
EUR - Pound Jumps on U.S. Bank Rescue Plan

The Pound made very impressive gains in yesterday's trading, as the U.S. Treasury Secretary Timothy Geithner unveiled an impressive and detailed banking plan to rescue U.S. banks, and uplift the U.S. housing sector. This led to the biggest rally on Wall Street since October. As a result, Britain and

Euro-Zone stock markets made big gains as well.

The Pound rose by 170 points in Monday's trading to close at 1.4683 against the USD. This was mainly owed to the fact that investor confidence poured back into the Pound as British banking shares soared in yesterday's trading. Also, the Pound has been undervalued against the Dollar as of late. Against the EUR, the GBP gained an impressive 103 points to close at 0.9310, as the EUR/GBP has moved away from parity yet again. Also, news that Germany's economy will decline by the most in the Western world this year, and unemployment in the Euro-Zone's largest economy will reach 5 million by the end of 2010, helped push down the EUR/GBP. The GBP also rose by about 350 points against the JPY to close at 143.35, as traders dropped safe-haven assets in Monday's trading.

Today, there is plenty of economic news coming out of both Britain and the Euro-Zone that will determine the GBP and EUR levels by the end of today's trading. From the Euro-Zone, there are the Euro-Zone Flash Services PMI, Flash Manufacturing PMI, and Current Account figures that are expected to be published simultaneously at 9:00 GMT. From Britain, the most important news will be the Consumer Price Index (CPI) figures and Inflation Report Hearings at 9:30 GMT, and the Bank of England (BoE) Governor Mervyn King's speech at 15:30 GMT. All these news events will be important in helping set the strength of the GBP and EUR in this week's trading.

JPY - Yen Plummets against Dollar and EUR

The Yen plummeted against its major currency pairs in yesterday's trading as investors ditched safe-haven assets for riskier ones. The Japanese stock market made notable gains too as the U.S. Treasury Secretary unveiled plans for a public-private partnership of investors buying out toxic banking and housing debt. This was the dominant factor leading to U.S. and global stock market rallies, and the ditching of safe-haven assets in yesterday's trading. The Yen was also hit hard yesterday; as the government seeks everything in its power to reduce the value of the JPY in order to spur Japanese exports.

The Yen closed down by 139 points against the Dollar in Monday's trading at the 97.74 level; the USD/JPY could be reaching the 100.00 mark in the near future. The EUR rose by 180 points against the Japanese currency to close at 133.47, as the safe-haven currency was dropped yesterday. Against the Pound, the Yen dropped a massive 350 points on Monday to close at 143.35. This comes about as the British currency reacted extremely positively to the banking news coming out of the U.S. As the Japanese economy continues to deteriorate, despite improvements from the U.S., expect the JPY to lose more ground against the major currencies in the coming days.

Crude Oil - Protests in Brazil and Increased Demand Help Raise Oil Prices

Crude Oil prices hit $54 yesterday, before settling at $53.62. This price is the highest Oil has been since December 2008, but still significantly lower than last July's high of $147 a barrel. Crude prices increased yesterday for a number of reasons. However, the 2 main factors were the U.S. banking plan unveiled by U.S. Treasury Secretary Geithner to buy toxic banking assets, and the better-than expected housing data. Also, there were protests in Brazil, which have been going on for 5 days, which have helped put upward pressure on Crude prices.

China announced yesterday that demand for Oil increased by 0.5%, marking a recent reversal. The underlying reason that has led to stability in the Crude Oil market is the supply cuts by the Organization of Petroleum Exporting Countries (OPEC). It seems their strategy has worked, and if they continue to cut the supply, Crude prices are likely to rise further. Additionally, if the U.S. continues to publish good data, and Obama shows that he is able to lead the world out of recession, then Crude prices may hit the $58-$60 price level by week's end.

Technical News

EUR/USD

The 4-hour chart is showing mixed signals with its RSI fluctuating in neutral territory. However, the daily 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 the preferable strategy.

GBP/USD

The bullish trend is losing steam and the pair seems to be consolidating around the 1.4690 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 a preferable strategy.

USD/JPY

The daily chart is showing that the pair is still in the bullish configuration. However, the 4-hour 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 may be a wise tactic.

USD/CHF

There is a very accurate bearish channel forming on the daily chart as the pair is now floating in the middle. However, the pair currently sits near the bottom border of the hourly chart's RSI, suggesting an upward correction may be imminent. If an upwards breach occurs, going long might be a good choice.

The Wild Card

Crude Oil

Oil prices rose significantly in the last week and peaked near $54 a barrel. However, the 4-hour chart's RSI is floating in the over-bought territory, suggesting that the recent upwards trend is losing 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.com analysis - A Busy News Day Promises High Volatility

After yesterdays relatively calm trading session, today the economic calendar is filled with high impact data that threatens to sow large volatility into the market. From the wide range of news reports, ForexYard advises its traders to pay special attention to the German Business Climate, the U.S Durable Goods Orders, New Home Sales, and Crude Oil Inventories.

Economic News

USD - Dollar Rises as Investors See U.S Recovery

The U.S currency extended gains on its Japanese and European counterparts Tuesday as optimism about a U.S. government plan to remove bad assets from banks' balance sheets prompted investors to resume safe haven bets on the Dollar. The USD rose versus the Japanese Yen to 97.87 from 96.94 Yen and against the EUR to $1.3464, up from $1.3633 late Monday. The Dollar also gained support from a growing view among market players that the Federal Reserve's quantitative easing (buying U.S. Treasury debt that would massively expand the Fed's balance sheet) would not undermine the valuation of the Dollar as many initially thought. The greenback however, slipped against the Pound, down to $1.4778, the lowest since Feb. 10th which was pushed up by an unexpected rise in U.K inflation.


The Fed's plan that was announced on Monday by U.S. Treasury Secretary Geithner has caused the Dollar to halt last week's slide, prompted as the Federal Reserve said its massive balance sheet expansion would include buying government debt. But despite the fact that the initial reaction to Fed quantitative easing was to sell the Dollar, some market participants reversed their views. Perhaps the U.S. will lead the global economy out of an economic recession. Although quantitative easing could lead to inflation as the money supply expands, economists said the other option is not to do anything, which could have more dire consequences for the dollar due to deflation and economic stagnation. It appears that in the long run the U.S. recovery plan has been benefiting the Dollar against both the Yen and the EUR.

EUR - EUR Slips vs. Dollar but Firm vs. Yen

The EUR came under pressure as Euro-Zone policy makers suggested Interest Rates in the region could fall further, just as data showed manufacturing and services sector activity continued to contract significantly. The currency fell 0.9% against the Dollar to $1.3508, down from the two month peak of $1.3739 touched last week. Against the Japanese yen the EUR rose 0.1% to 132.40 Yen having earlier struck 134.50 Yen. The European Central Bank (ECB) has announced that it has not used up all its room to maneuver Interest Rates. The news followed comments overnight from ECB President Jean-Claude Trichet, who again said the benchmark Rate could be cut to help kick-start the Euro-Zone economy.

On top of that, there was more negative news on the Euro-Zone economy, with key gauges of Euro-Zone services and manufacturing showing weal economic activity as firms slashed jobs and prices. The British Pound however, surprised with a rise of 0.7% against the USD at $1.4672 after data showed British annual CPI inflation rose to 3.2% in February from 3.0% in January. The Pound slumped 23% versus the EUR and 26% against the dollar last year as the U.K. economy slipped into its first recession since 1991 amid record losses at the nation's banks, prompting the Bank of England to cut the main Interest Rates to a record low of 0.5% in 2009. In yesterday's trading the GBP strengthened to 91.73 per EUR, the highest level since March 16, from 93.56 pence. Against the Yen, the currency jumped as much as 2.7% to 145.09, the strongest level since Dec. 1st. The U.K. currency may further advance against the USD toward $1.50 by May, if the GBP breaks through the key level of $1.4650.

JPY - Yen Declines as the Demand For Save Heaven Currency Diminishes

The Japanese currency inched up against the EUR and the AUD on Wednesday, pulling away from this week's five-month low as a drop in Japanese equities tempered buying of higher-yielding currencies. The yen climbed to 131.39 per EUR from 131.81 late in New York yesterday, when it touched 134.51, the weakest level since Oct 21st. Although the Yen has regained some ground after dropping on Tuesday to a 5-month low against the EUR and a 4-month trough versus the Australian dollar, it is likely to stay on the back foot, analysts have said. The JPY reaction was subdued to data showing Japan's trade balance returned to a surplus in February. The 82.4 billion Yen ($841.6 million) surplus contrasted with economists' forecasts for a deficit of 10.9 billion Yen. The surplus comes after Japan posted its largest deficit ever in January, when exports fell sharply due to a slowdown in the global economy.


The Yen role as a safe haven currency has apparently diminished, and there has been little reason for traders to buy the yen actively. Investors were also reluctant to buy the Yen with the Bank of Japan having raised the amount of government debt it buys outright to thaw credit markets. Instead, investors continue to favor currencies whose central banks have Interest Rates above zero and look unlikely to use quantitative easing to get their economies moving, such as the Australian dollar.

OIL - Oil Remains Steady Ahead of U.S. Supplies Data

Crude Oil prices rose slightly on Tuesday after U.S. stock markets bounced off their lows amid optimism that the government's plan to unburden banks of soured assets could help shore up the U.S economy. The gains were limited however, as dealers awaiting a round of U.S. Crude Oil Inventories data that analysts expected would show an increase in Crude stockpiles. Crude Oil rose to settle at $53.98 a barrel after hitting a 3 month high of $54.20 earlier in the day. Analysts said they expected Oil inventory data to be released by the U.S. Energy Information Administration on Wednesday to show a 1.2 million barrel build in crude stockpiles.

Energy demand in the world's biggest consumer economy has been hard-hit by the economic meltdown, buffering inventory levels as global consumption has been shrinking for the first time in a quarter century. Oil prices have climbed from under $33 last December, partly due to aggressive supply cuts from the Organization of Petroleum Exporting Countries (OPEC), but remain almost $100 below last summer's peak. OPEC agreed to hold output targets steady at its meeting in Vienna on March 15th due to concerns that higher prices may harm an ailing global economy. Ministers pledged to tighten compliance with record cutbacks agreed on last year to bolster Crude Oil prices.

Technical News

EUR/USD

After dropping close to 300 pips since the beginning of the trading week, the pair seems to be consolidating around the 1.3470 level. However, the MACD indicator on the 4-hour chart signals that the bearish momentum is still has potential. Going short appears to be the preferable choice today.

GBP/USD

The cable has been trading quite peacefully lately without making any sharp movements. And now, a bearish cross on the daily chart was formed, suggesting that the pair is on the verge of a downtrend. Going short with tight stops might be a good strategy today.

USD/JPY

After two failed attempts to breach the 98.50 level, it appears that the USD/JPY might have reached its weekly peak. Currently all oscillators on the 4-hour chart are giving bearish indications, and as the Bollinger Bands on the 1-hour chart are tightening, it seems that a downtrend could be initiated today.

USD/CHF

The pair's 4-hour chart is showing bearish signals as a fresh bearish cross has formed on the Slow Stochastic Oscillator. The Bollinger Bands also appear to be tightening, indicating the potential for a violent breach. Going short with tight stops appears to be the preferable strategy for today.

The Wild Card

Crude Oil

Crude Oil touched on a 3-month high yesterday and appears to be reversing. The daily chart shows the RSI trading in the oversold region. Also a bearish cross has formed on the Slow Stochastic Oscillator, indicating the potential for a downward correction. This could be good a good opportunity for forex traders to profit by being short on Crude Oil today.

 

[forexyard]

Forexyard Analysis - EUR/USD Volatility the Order of the Day

Many forex traders in the market would be blind to have not noticed the sharp volatile movements occurring in the world's primary currency pair: the EUR/USD. This tug-o-war between the two largest world currencies comes about as each side takes aggressive steps to combat the recent recession. As the U.S. continues to publish positive economic data, and the Euro-Zone considers taking steps similar to those taken in the States, this pair's sharp volatility will no doubt continue through to next week.

Economic News

USD - Dollar Falls on Increased Risk Appetite

The Dollar finished Thursday's trading session lower against a number of its currency pairs after U.S. Treasury Secretary Timothy Geithner said he was open to expanding the use of the International Monetary Fund's (IMF) special drawing rights. As of yesterday's close, the USD fell against the EUR, pushing the currency pair to 135.69. The greenback experienced similar behavior against the CHF as the pair fell from 1.1299 to 1.1227 by day's end.

A disappointing Treasury note auction reversed an early rally in U.S. stocks, but investors ultimately shrugged off that disappointment and focused on the strong economic data. The government reported that New Home Sales in the U.S. unexpectedly rose in February from a record low, as plummeting prices and cheaper mortgage rates lured some buyers, while U.S. orders for long-lasting manufactured goods also unexpectedly rebounded in the same month.

However, demand for New Homes has been limited by the highest jobless rate in a quarter-century and shrinking household wealth, indicating housing may not rebound quickly even as steps to cut borrowing costs and reduce mortgage defaults take hold. Therefore, investors in the coming weeks may unwind their Dollar positions, as they realize that the U.S. economy has a long road ahead for economic recovery.

Investors may look for the unusual price volatility to continue in the EUR/USD as the pair attempts to stabilize and find new support and resistance lines. Large price jumps such as these are not common place and present terrific opportunities to take advantage of the price swings for large profitable gains. In the short-term, the Dollar may continue to fall against the EUR, as traders look to take-up riskier assets.

EUR - EUR Appreciates Despite Negative Figures

After a relatively negative news day in the Euro-Zone, the EUR still managed to appreciate against most of its currency counterparts. The EUR gained nearly 100 points versus the Dollar, and closed at 1.3569. Against the CHF it mainly fluctuated within a small range, as the pair closed at 1.5231. The EUR climbed against the Pound by an impressive 120 points to close at 0.9301. The European currency also made some impressive gains against the Yen, to close Wednesday's session 85 points higher at 132.67.

The major economic event that came out of the Euro-Zone yesterday was the German Ifo Business Climate data release. German business confidence fell to the lowest level in more than 26 years in March, adding to signs that the recession is deepening in the Euro-Zone's biggest economy. Analysts expect the negative data release to add additional pressure on the European Central Bank (ECB) to make another interest rate cut in the near future. This may affect the EUR in the long-term, but in the short-term forex traders are taking advantage of the EUR to make gains on the high yield of the currency.

Looking ahead to today, the most important economic indicator scheduled to be released from the Euro-Zone is the GfK German Consumer Climate at 7:00 GMT. Analysts are forecasting this figure to slightly decrease 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 in the short-term. Traders are also advised to follow the Retail Sales figures coming out of Britain at 9:30 GMT, and the Unemployment Claims figures coming out of the U.S. at 12:30 GMT as these results may set the EUR's main currency crosses going into next week.

JPY - Yen Continues its Slide against the EUR

The Yen completed yesterday's trading session with mixed results versus its major currency pairs. The JPY was broadly unchanged versus the USD on Wednesday and finished the trading session at the 97.77 level. The JPY also saw bearishness against the EUR as the pair jumped by a notable 85 points to close at 132.67. Over the past month the pair has risen over 2,200 points as investors lost confidence in the Japanese currency. The JPY did make some impressive gains yesterday, however, against the GBP to close up nearly 90 points at 142.63. On a larger note, this only marks a slight reversal in the 2 currencies, as the JPY fell dramatically against the GBP in this week's trading.

Japan's export collapse may push sentiment among the nation's largest manufacturers to the lowest level in more than 30 years in March, triggering more investment cuts and job losses. Export declines have set new records each month since November, as U.S. and European consumers have retrenched. The collapse in U.S. sales forced Toyota to cut thousands of jobs and slash domestic production by half this quarter. The automaker may not raise output until after the 3rd quarter of this year. Today, forex traders are advised to follow data releases coming out of Japan, the U.S., the Euro-Zone and Britain as these results are likely to set the short-term strength of the JPY.

Crude Oil - Oil Prices Strong Despite U.S Crude Oil Inventory Rises

Oil prices remained strong yesterday, as they only slid 12 cents, even though U.S. Crude Oil Inventories rose by a higher-than-forecasted 3.3 million barrels. The International Energy Agency (IEA) said that the inventories rose to 356.6 million barrels, which is 15.6% above price levels from one year ago, the highest level since 1993. If it wasn't for the inventories data, Crude prices may have risen by several percent, as the U.S. released some impressive economic data. However, the New Home Sales and Core Durable Goods data helped prevent Crude prices from slipping on Wednesday.

It is important to take into account that Crude Oil prices have risen through the past 2 weeks, as the U.S. government plans to buy up toxic assets from banks. Additionally, the U.S. has continued to release a string of positive economic data. This has been compounded by a weaker Dollar that has also caused investors to flee to commodities such as Crude Oil. Furthermore, if the U.S. continues to publish more positive economic news, and if the American government continues to be aggressive in tackling the current financial crisis, then Crude prices may hit $60 Dollar by the middle of April.

Technical News

EUR/USD

This pair has been range trading for the past several days with a build-up towards what appears to be an intense volatile movement. After the sharp rise in price last week, the pair has been down-correcting to find its true value. With most oscillators beginning to go neutral, the daily chart's RSI still shows this pair in the over-bought territory, meaning there is still room for a downward correction. The Bollinger Bands are tightening on the hourly chart. As such, we might be seeing some downward movement today. Going short might be a wise choice.

GBP/USD

This pair appears to be floating in the over-bought territory on the hourly and daily charts' RSI, indicating a downward correction may be impending. The bearish cross on the daily chart's Slow Stochastic also supports this notion. However, there does appear to be a bullish cross on the 4-hour chart's Slow Stochastic, which demonstrates that this pair may actually be range trading with clear ups and downs. Buying on lows and selling on highs could be a good move throughout the day.

USD/JPY

The recent uptrend has pushed the price of this pair into the over-bought territory on the RSI of the hourly chart, signaling an imminent downward correction. A bearish cross may also be forming on the hourly and daily charts' Slow Stochastic, which would support the notion of a downward move. Going short with tight stops might be a wise choice today.

USD/CHF

With relatively flat movement over the past several days, this pair has remained in a range-trading pattern for some time. Most oscillators are giving off neutral indicators, but there was a recent bullish cross on the daily chart's Slow Stochastic, signaling a correction to the sharp downward movement from last week. With the weekly Momentum oscillator still showing an upward direction, going long with tight stops may be a wise choice today.

The Wild Card

NZD/USD

This pair's sustained upward movement has finally pushed its price into the over-bought territory on the hourly and daily chart's RSI. Not only that, but there actually appears to be a bearish cross either formed or forming on the hourly, 4-hour, and daily charts' Slow Stochastic oscillators; all this information points to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach and go short in order to ride out the impending wave.

 

[forexyard]

Forexyard Analysis - Dollar to Move Today on Release of Economic Data

The Dollar has seen increased strength as rising U.S. equity markets helped to erode the dramatic price declines from the previous week. Trading will end this week as a slue of economic data due to be released today will provide ample opportunities for traders to enter the market on higher than normal volatility.

Economic News

USD - Dollar Recovery Continues

The Dollar rose yesterday against most of its major rivals as riskier currencies fell out of favor. Despite strong gains in U.S. equities, the Dollar gained ground as the likelihood of further European Interest Rate cuts loom over the currency markets. At the end of the Thursday's trading, the EUR/USD was little changed, despite high volatility most of the day. The USD/JPY closed higher at 98.32 from 97.77. Against the Pound the Dollar also finished higher at 1.4481 from 1.4585.

The dramatic sell off of the Dollar appears to have ceased as yesterday's trading was characterized by reduced market risk and future Interest Rate levels. The Dollar was sold heavily last week, sparked by the announcement that the Federal Reserve will begin a quantitative easing program. Slowly the currency markets are returning to relatively normal trading patterns as traders see little reason to take risks on higher yielding currencies in the face of the economic downturn.


Today's trading may be characterized by a glut of economic indicators surrounding consumer spending and attitudes. Due today are personal spending numbers and a revised consumer sentiment report. A better than expected result in the data releases could provide another boost to the Dollar as the currency continues to recoup its losses from last week. Look for the EUR/USD to drop below the 1.3500 level today.

EUR - EUR Set for Further Rate Cuts

The EUR experienced mixed results yesterday as the market begins to price in potential Interest Rate cuts to the European currency. Minor declines were seen against the Dollar, but the EUR climbed consistently against its other currency crosses. The EUR/JPY finished the day higher at 133.41 from 1.3267, and the EUR/GBP ended up at 0.9368 from 0.9301.

Market participants are set to start pricing in the potential for another Interest Rate cut by the European Central Bank (ECB). The ECB is scheduled to meet next week to decide if European Interest Rates will need to be trimmed from their current rate of 1.5%. One politician weighing in on the matter was British Prime Minister Gordon Brow. In a press conference; Brown said he expects that the European benchmark rate would fall below its current level. Perhaps Prime Minister Brown is short on the EUR for obvious reasons.

Traders today will want to pay attention to a few important releases from the Euro-Zone economy and Britain. From Europe we will see new industrial order numbers. This indicator is forecasted to show worsening numbers that highlight the deep recession that plagues Europe. Also we will have Britain's current account figures released. This number may have the potential to surprise the market. Better than expected results could add some buoyancy to the GBP against the EUR in today's European trading session.

JPY - Yen Foresees New Resistance Level

The Yen suffered during yesterday's trading; sliding against the Dollar, but in early morning hours of the Japanese trading session the trend began to reverse. Recent gains in equity markets have proven to be troublesome for the Yen. The Japanese currency has traditionally been used as a safe haven asset, but recent safe haven currency movements have not been kind to the Yen. Perhaps this is due to the underlying weakness in the Japanese economy and the rapid decline of the country's export sector.

The Yen slid against the Dollar to 98.32 from 97.77. Against the Pound the JPY finished down slightly at 142.40 from 142.63. The JPY's most notable loss was against the EUR, as the EUR/JPY level finished up 74 pips at 133.41. The financial year in Japan wraps up at the end of March. With the New Year coming, so may be the 100.00 Yen mark against the Dollar. The resistance level is significant as the USD/JPY has not touched on this valuation since the beginning of November.

Crude Oil - Crude Oil Prices Soar

The price of Crude Oil soared in Thursday's trading session, adding to big gains in the past several weeks. Crude prices finished up slightly over $1.50 or 3% at $53.81. Helping the commodity continue its price appreciation has been the recovery of U.S. equity markets from their New Year lows. What has also helped Crude prices as of late is the increased optimism by from investors, which was initiated last week by a string of positive economic data releases from the U.S.


An uptrend is showing in the last two weeks of trading with a host of a number of factors working in favor of rising Crude Oil prices. The rally in stocks has correlated with the rise in price of Crude Oil. It has also raised hopes that a spike in demand may be coming along with it. Adding support to the price appreciation has been the steadfast commitment by OPEC to continually reduce the supply of Crude Oil. Combine this with a weak U.S. Dollar and it makes for a rally in the price of Oil. Traders may look for a short term price cap of $55 to take profits.

Technical News

EUR/USD

The typical range trading on the 4 hour chart continues. Both the hourly RSI and Slow Stochastic are floating in neutral territory. However, the daily 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.

GBP/USD

The bullish trend is loosing its steam and the pair seems to consolidate around the 1.4480 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. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

USD/JPY

The hourly chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, there is a fresh bearish cross forming on the daily chart's Slow Stochastic indicating a bearish correction might take place in the nearest future. In that case traders are advised to swing in after the breach takes place.

USD/CHF

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

The Wild Card

Crude Oil

Oil prices rose significantly in the last two week and peaked at $53.75 per barrel. 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 - Greenback Rallies on Speculation the ECB will cut Rates...

The Dollar rose 0.2% against the EUR as weaker than expected Euro-Zone industrial orders and German inflation data undermined recent investor confidence and favored the safe haven greenback. The ECB is pressured to follow the Federal Reserve in buying bonds to lower Interest Rates, a policy known as quantitative easing. Along expectations that it will cut its main policy Rate by half a percentage point to a new record low of 1%, the market is keen to see how far it might follow other central banks such as the Fed in taking unconventional steps to shore up the economy

Economic News

USD - Could the Dollar Continue Its Bullish Trend?

Last week gave some extraordinary opportunities for Forex traders to make profits from going long on the U.S Dollar. The two leading fronts on which the USD marked unique gains are against the EUR and the GBP.

It appears that the USD saw this bullish trend as a result of some unexpected positive news, especially regarding the housing sector. Last week, both the Existing Home Sales, and the New Home Sales, delivered better than expected figures, reflecting in 4.72M residential buildings that were sold during February, and in 337K new single-family homes that were sold during February as well. This data came as a big surprise, as analysts had quite gloomy predictions for the two reports, and therefore turned a very strong uptrend for the Dollar. In addition, as you all must remember, this entire recession began as a result of a deep crisis in the U.S home sector, and now a series of positive result from that sector has managed to elevate the USD so rapidly. Another positive data which came last week were the Durable Goods Orders indices which delivered both much better than expected figures. Whilst analysts anticipated negative growth in the total value of new purchased orders for durable goods during February, the real figures showed almost 4.0% growths.

As for the week ahead, two major events will most likely determine the Dollar's direction for the upcoming week. The first will be the Pending Home Sales which is currently expected to continue to positive line of the housing sector; however a surprising negative result could create some worries among investors regarding the U.S economy. The second major news event will of course be the Non-Farm Employment Change, expected on Friday, 12:30 GMT. as proven many times before, investors are putting a lot of faith in the credibility of this survey, and as such react immediately to its results.

Traders are advised to follow those two leading economic indicators as they are likely to set the tone for the USD trading this week.

EUR - Would the ECB Cut Interest Rates to 1.00% Later On This Week?

An extremely volatile week, which included many ups and downs, concluded with a deep drop for the EUR. The EUR/USD dropped to almost 1.32, and the EUR/JPY fell below 129.50.

The first reason for the EUR drop was the strengthening Dollar, which rose against the EUR as well. The second and even greater reason was the unwillingness of the European Central Bank (ECB) to create a rescue plan for the European Nation, which could somehow imitate the American plan. Investors are now seeing the U.S economy as a dynamic, flexible economy, in which its leaders are doing all they can in order to salvage the situation while they can. On the other hand, the European monetary system is beginning to be seen as a conservative organization, which is reluctant to react to the rapidly changing conditions of the global economy. Investors are thirsty for a European rescue plan, and if one shall arrive, it will probably signal an uptrend for the European currency.

As for this week, the ECB will announce the new Minimum Bid Rate on Thursday, and is widely expected to cut Interest Rates by 0.5% to merely 1.00%. Some might say that this move is too little, too late, as the U.S, Japan and Great Britain have all lowered their Rates below 1.00%, without succeeding in making a real change in their economies. Nevertheless, if indeed the ECB will decide to cut Interest Rates, an immediate reaction of a drop in EUR value is expected.

Forex traders are also advised to follow Jean-Claude Trichet's speech on Monday, as he may discuss the possibility of cutting Interest Rates. Such comments could have massive influence on the market.

JPY - The JPY Looks to Halt Its Bullish Momentum

Over the last trading week the JPY saw rising trends against the EUR and the GBP, and experienced mixed results vs. the USD. The JPY underwent it most remarkable bullish trend against the EUR, as the EUR/JPY dropped to the 129.40 level.

Last week the Japanese Trade Balance showed a difference of -0.04T between exported to imported goods during February. Although this is a negative figure, it was much better than the -0.29T which was expected. This indicator has an immense impact on the Japanese economy as it relies greatly on its export activity. Also last week, the Tokyo Core Consumer Price Index, which measures the change in price of goods and services, rose by 0.4% in March, also indicating that the Japanese economy is on the phase of expanding, and not contracting.

As for the week ahead, most of the impacting data will be delivered from the Euro-Zone and the U.S economy. Nevertheless, traders should follow the Tankan Indices, which are expected on Tuesday night. These surveys cover a wide range of the local manufacturers, and thus have a large impact on the Yen. Analysts forecast extremely negative figures for the indices, and such result might generate a bearish trend for the JPY.

OIL - Will Crude Oil Reaches Below $50 a barrel?

Crude Oil prices has dropped dramatically just before the weekend. After peaking at over $54 a barrel, Crude Oil is currently traded for $51.50 a barrel. Crude Oil prices fell predominantly as a result of the surging Dollar. Crude Oil is priced in Dollars, and as such, a rising trend for the USD tends to have to opposite affect on Crude Oil.

Another data that helped to lower Oil prices was the U.S Crude Oil Inventories indicator from Wednesday, which came higher-than-expected, reflecting 3.3M additional barrels of Crude Oil held in inventory by commercial firms from the previous week. The combination of high supply and strong Dollar are a simple formula for dropping Crude Oil prices.

As for this week, traders should follow global economic news, especially from the U.S, as they are likely to determine Oil prices. Traders are advised to keep notice that for as long as the USD continues to appreciate, Crude Oil prices might continue to decline, as low as $50 a barrel!

Technical News

EUR/USD

The 4 hour chart is showing that the pair is still floating within its bearish channel. However, the RSI on the daily has crossed the 30 line, indicating that the market is oversold. The Slow Stochastic on the 4 hour chart is also showing a fresh bullish cross, suggesting that a bullish trend might take place. Going long with tight stops appears to be preferable.

GBP/USD

The bearish trend continues with plenty of steam as the pair now floats around 1.4210. The RSI of the hourly charts indicates that there is still more room to run. The next target price might be 1.4143. Going short with tight stops seems like the right choice today.

USD/JPY

The 4 hour chart is showing mixed signals with its Slow Stochastic fluctuating at the neutral territory. However, the Daily Chart's RSI is already floating in the overbought territory indicating that a bearish correction might take place in the nearest future. Going short with tight stops appears to be preferable strategy.

USD/CHF

There is a very distinct bullish formation continues on the hourly level, as the pair is now floating in its lower section. In addition, all oscillators on the daily chart are pointing up, suggesting that the bullish move might extend. Going long might be the right strategy today.

The Wild Card

Oil

This commodity has been on a sharp sinking movement over the weekend and this bearish correction is likely to stick around in the near future. All charts are still providing a mild bearish signal; however, there may be short-term corrections during this downtrend. Therefore, forex traders can maximize profits by selling on highs and taking advantage of this bearish trend.

 

[forexyard]

Forexyard Analysis - Threat of the U.S. Auto Bankruptcy Boosts the Dollar

Turmoil in the U.S. auto industry had currency traders moving into safe haven positions of the Dollar and Yen. Further equity losses also contributed to a lack of confidence in the global economy and lower risk taking.

Economic News

USD - Threat of Auto Bankruptcy Spurs Dollar Buying

The Dollar continued its appreciation yesterday as fears of bankruptcy filings in the U.S. auto industry sparked safe haven currency bets. Losses in U.S. equity markets triggered by autos and bank worries also helped to bring traders to the Dollar. The EUR/USD finished the day at 1.3190 from 1.3268, while the GBP/USD ended at 1.4256 from 1.4276.


Yesterday there was little reason for Forex Traders to take positions in riskier currencies. Over the weekend Treasury Secretary Geithner said some banks may need further capital injections. Also shaping the markets was the Obama administration's position that it may prefer a bankruptcy filing of an auto maker versus further bailouts. Now a looming threat of a General Motors or Chrysler bankruptcy filing hangs over the head of the market. A situation like this could have a detrimental effect on the financial markets as the debt of these two companies is widely held throughout the global financial system.


Looking to today's trading, traders should be aware of the release of Canadian monthly GDP at 12:30 GMT. The USD/CAD appreciated by 1.2% today as the market anticipates a contraction of Canadian GDP by 0.6% in January. If the result comes in worse than the forecasted value, look for the USD/CAD to rise close to the 1.2700 resistance level.

EUR - Is Inflation a Concern for the EUR?

The EUR appears to be in a correction as the currency's gains on the Dollar are unraveling. The currency has slid the past 2 days amid concerns of future monetary policy moves by the European Central Bank (ECB) and a drop in risk tolerance. Yesterday the EUR finished lower against the Dollar while the EUR/GBP fell to 0.9250 from 0.9312.


Market forecasts have the ECB slashing rates by another 50 basis points later this week. However a debate still rages whether the ECB will take further measures to ease the strained European credit markets through a program of buying long term government bonds. This would follow a move taken by the U.S. Federal Reserve and Bank of Japan. Yesterday ECB President Trichet addressed the European Parliament and said that the European economy has weakened since the beginning of the year. Also notable was the downgrade of the sovereign debt rating of Ireland.


Today the EUR may be impacted by the release of the yearly CPI Flash Estimate. It is an early indicator of inflation in the EU. Trichet yesterday mentioned that there is no significant risk of deflation and the ECB has set a target rate of inflation near 2%. The Flash Estimate is forecasted to rise by 0.7%. A higher number that contradicts Trichet's statement yesterday may hurt the EUR further during today's trading.

JPY - Yen Boosted by Risk Adverse Trades

Yesterday the USD/JPY saw heavy volatility on the heels of the Obama administration favoring an orderly bankruptcy of the American auto manufactures and large losses in equity markets. The pair ended at 98.15 from 97.75. The EUR/JPY also experienced heavy volatility yesterday, reaching as low as 126.40 to close at 130.05 from an opening price of 129.76. This was the strongest the Yen has been against the EUR in the past 11 days.

In early morning hours of the Japanese trading session, the Yen began to slip after Japanese unemployment numbers came in worse than expected. Some economists believe that unemployment rates may not yet have peaked. As the number of Japanese exports continues to decline, manufacturers will eventually cut back on costs in the form of further workforce reductions. Traders will be watching for the release of the Tankan Manufacturing Index later today. It is a key gauge of market sentiment in the Japanese economy. The release of poor results for this indicator could send the Yen lower against the other majors.

Oil - Crude Drops below $50

The price of Crude Oil has once again dropped below the psychological price level of $50. Crude Oil shed 4.5% yesterday as fears of bankruptcy for the Big 3 American auto manufacturers hurt the demand for Crude and sent equity markets lower. The recent recovery in the Dollar has also been a source of restrain in the price of Crude Oil.

The market has once again sent the price of Crude lower as the global economy shows very few signs of recovery. Continued job losses and equity losses have dropped the price of Crude Oil from last week's high of $54. Traders may not see any support today as the U.S. CB Consumer Confidence will be released today at 2:00pm GMT. Don't be surprised to see a gloomy reading from American consumers. This may send Oil lower today, near the $48 price level.

Technical News

EUR/USD

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

GBP/USD

The daily chart is showing mixed signals with its RSI 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.

USD/JPY

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

USD/CHF

Narrow range trading continues as the pair did not make a significant move in either direction, and is currently traded around the 1.1480 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. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

The Wild Card

Crude Oil

Oil prices are once again dropping, and a barrel of oil is currently traded around $48.93. And now, all oscillators on the 4- hour chart are giving bullish signals, indicating that oil prices might go up. This might give forex traders a great opportunity to enter a very popular trend.

 

[forexyard]

Forexyard Analysis - U.S. Employment and Housing Data to Lead Today's Market

The beginning of a new month always precedes 2 important events in the forex market: the release of immensely important U.S. economic data and an influx of trading after workers receive monthly salaries. Kicking off the month of April today, traders will notice a large portion of economic news coming from the States; particularly regarding housing, employment, inflation, and the ever-increasingly important Crude Oil inventories report. If you were waiting for the right day to begin trading forex, that day has come!

Economic News

USD - USD Viewed as World's Dominant Currency

The U.S. currency was lower against most major currencies Tuesday, ahead of this week's Group of 20 nations (G20) meeting. Analysts said that worries about the financial sector and signs of rising tensions ahead of tomorrows meeting of world leaders would likely limit downslide potential for the USD. Still the Dollar's outlook remains strong and stable against the majors, despite the ongoing deluge of negative U.S. economic data.

Analysts stated that the market has started to focus on this upcoming summit of major industrialized economies in London on Thursday, with investors hoping for agreement on measures to revive the global economy. Meanwhile the U.S currency rallied to a 3-week high against the Japanese Yen to as much as 99.36 Yen. The Dollar rose more than 2% against the JPY, as weak economic data and year-end prompted Japanese investors to bring money home, reversed course as traders closed the books on the fiscal year.

The World Bank president said on Tuesday that the Dollar is likely to remain the world's dominant reserve currency and a strong U.S. currency is a key to lifting the world out of economic and financial crisis. Given the important role the U.S. Dollar plays in the global financial system, it is incumbent upon the United States to pursue sound economic, fiscal and monetary policies.

EUR - EUR under Pressure Ahead of ECB Decision

The European currency pared gains slightly against the USD on Tuesday after data showed U.S. home prices plunged a record 19% in January from a year earlier, suggesting U.S housing remains in a deep recession. Against the Dollar, the EUR firmed 0.7% to 1.3292. Analysts believe the EUR's gains may be limited, however, as investors look ahead to Thursday's European Central Bank (ECB) interest rate decision. The EUR may decline against the Dollar as economists estimate that the ECB will lower rates to 1% at this month's meeting. The EUR did rise, however, against the JPY, advancing 1.5% to 130.20 Yen.

The ECB is forecast to cut rates by 50 basis points with the possibility that it will follow other major central banks and adopt other unconventional measures to boost money supply. Yesterday's fundamental data showed that Euro-Zone inflation plunged to an all time low of 0.6% year-on-year in March, strengthening the case for a deep interest rate cut. The inflation data underlines that the Euro-Zone is as much a victim of the current crisis as the U.S. and the UK and the ECB will be forced to adopt more aggressive measures, analysts have said.

Moreover, the Organization for Economic Cooperation and Development (OECD) forecasted this Tuesday that the European economy would shrink 4.1% this year and a further 0.3% in 2010; the most pessimistic outlook of all institutional forecasters thus far.

JPY - Yen Reverses its Earlier Losses on Auto Bankruptcy Fears

The Yen strengthened on speculation President Barack Obama will let U.S. automakers go bankrupt, reviving demand for the Japanese currency as a refuge from the global financial crisis. The Yen advanced to 98.67 versus the USD from as low as 99.47 earlier and from 98.96 yesterday. Japan's currency also strengthened to 130.43 per EUR from as low as 131.89 earlier and from 131.13.

Yesterday, however, was not a very successful day for the Japanese currency. The Yen slid on a surge in Japanese investors' demand for foreign currencies on the last day of Japan's financial year. The JPY fell against the Dollar, extending its worst quarterly loss since 2001, after a Bank of Japan (BoJ) survey showed business sentiment dropped the most on record, reducing demand for the currency. The Yen also weakened versus the EUR after reports this week showed factory output dropped for a 5th month and the unemployment rate climbed to the highest in 3 years.

Crude Oil - Crude Oil Fails to Break $50

Crude Oil prices fell below $49 a barrel on speculation that a government report will show U.S. inventories rose from the highest level in more than 15 years. Crude earlier rose Tuesday, extending its monthly gains to nearly 11% as rising stock markets helped boost investment sentiment while a weakening greenback increased Dollar-denominated commodity prices. The Energy Department is scheduled to release its weekly supply update at 14:30 GMT. The report is forecast to show that inventories of gasoline and distillate fuel, a category that includes heating oil and diesel, dropped. Oil prices rose $1.25, or 2.6%, yesterday to $49.66 a barrel as equities increased and a weaker Dollar enhanced the appeal of commodities.

The Organization of Petroleum Exporting Countries (OPEC) and the U.S. Energy Department cut their 2009 forecast for oil demand this month. They expect consumption to slump by more than 1 million barrels a day this year. Crude Oil supplies have increased as OPEC agreed on March 15th to keep output quotas unchanged, saying members have to cut a further 800,000 barrels a day to comply with existing targets. OPEC is next scheduled to meet on May 28th in Vienna.

Technical News

EUR/USD

After going through a mild technical correction, it appears that the pair has resumed its general downtrend, as it is now trading at the 1.3200 level. Currently, as all oscillators on the 4-hour chart are pointing down, it seems that going short might be the preferable decision today.

GBP/USD

For the last two days the Cable has consolidated around the 1.4250 level without making any significant movements. However, a flag formation on the daily chart implies that an uptrend is about to be initiated. Going long with tight stops might be a good strategy today.

USD/JPY

After two failed attempts to breach through the 99.50 key Fibonacci level, the pair is currently traded around the 98.80 level. A bearish cross on the 4-hour chart's Slow Stochastic suggests that a bearish reversal is imminent. Going short seems to be the right choice today.

USD/CHF

The pair is currently traded around the 1.1430 level, and seems on its way to test the 1.1550 level one more time. If the pair will indeed breach the resistance level, a bullish trend could be lunched with the potential of reaching towards the 1.1700 level.

The Wild Card

Gold

For the past few days Gold has been traded for about $920 per ounce. A triple doji formation on the daily chart indicated that a strong breach is imminent. A bullish cross on the daily chart's Slow Stochastic suggests that the breach could be bullish. This might be a great opportunity for forex traders to enter the trend at a very early stage.