Forexyard Analysis

15/10/'07 - US Empire State Business Conditions Index.

Economic News

USD

The greenback was trading within a wide range last week, and started to show some positive momentum towards the end of the week. On many occasions we saw the USD showing massive volatility and price action due to several important news events. US Retail Sales showed a figure of 0.6% after an initial consensus of 0.3%. The US PPI also helped to push the greenback as it came out of negative territory from -1.4% and jumped to 1.1% which was even higher than the expected 0.5%. The sweet taste of positive news was damaged with the release of the Consumer Sentiment that dropped from 83.4 to 82.0 and was expected to rise to 84. The general USD situation is causing the Feds to rethink whether they will hike the rates one more time this month, and if indeed a hike will occur, than it will be a 0.25 hike and not 0.5 like September.

As for today, traders are expecting the Empire State Business Conditions Index to be released at 12:30 GMT. The Index measures the general Business conditions of manufacturers in New York State and is considered to be quite important in the manufacturing sector. The forecast for the index is a slight decrease from 14.7 to 13.0. Later today, at 23:00 GMT Federal Reserve Chairman Ben Bernanke will speak about the economic outlook at the Economic Club of New York, and will probably cause some choppy price movement around the time of the speech.

The rest of the week will be relatively packed with major news events such as the TIC Net Long-Term Transactions, Industrial Production, CPI, Housing Starts, and Building Permits. These will determine whether the USD will continue the positive momentum it started last week, or keep with its already weakening trends.

EUR

The European calendar was quite light last week, as most of the price action was derived from US events. Most US data came out relatively high which caused the EUR to trade lower against the USD and halted the massive uptrend that took the EUR to all time highs. The EUR/JPY on the other hand showed no hesitation and continued to go up as the JPY grew weaker against all its crosses. The upcoming week will be full of European news events that might push the EUR back up to break another all time high, as it is already trading in a relatively close area. Traders will be expecting the Swiss Retail Sales, the German ZEW Economic Sentiment, the UK Minutes Meeting, the UK Retail Sales and GDP to be released this week. These events should probably take the EUR higher this week, as most of them are expected to announce higher figures than in previous releases. Together with a relatively packed US calendar it should be an interesting week all around.

JPY

The JPY showed strong negative momentum all throughout last week, taking the USD/JPY to 117.63, and the EUR/JPY to 166.90. Sentiments are showing that carry trades are in full motion and massive shorting of the JPY is in play all across the board. Bank of Japan (BOJ) Governor Toshihiko Fukui spoke last night at a BOJ Branch Manager meeting, in Tokyo, and together with Industrial Production release continued to push the JPY down throughout the night. The upcoming week has no major news scheduled to come from the Japanese market, as most of trader's attention will be focused on US and Europen events.

It is not a secret that shorting the JPY will probably be the right move throughout the following week. Carry trades will probably grow even stronger, even into the following weeks taking the JPY to levels it has not seen for several months ago.


Technical News

EUR/USD

The pair is starting to lose its positive energy, as another break on the upper level of the range has failed. The daily chart is showing a bullish cross on the slow stochastic and together with the RSI the signal is very bullish. Next target price appears to be around the 1.4270 level, and a breach through that level will validate a greater move up.

GBP/USD

The cable is trading in a wide range since the middle of September, and there is a very distinct horizontal channel, as the pair is floating at the bottom area. It appears that a move is quite imminent and will most likely be bullish. Next target price should be around 2.0420.

USD/JPY

The pair is in a very distinct upwards channel with all indicators showing strong bullish momentum. The RSI on the daily and on the 4 Hour chart is floating around 50 which indicates that there is still more room to run.

USD/CHF

The pair is range trading after the relatively big correction from the 1.1600 level. There seems to be a slight bearish signal on the 4 Hour chart that might take the pair below 1.1750 which is a key level. A breach through that level will validate a bigger bearish move.


The Wild Card

Crude Oil

Oil is floating at all-time high levels and has managed to breach through the 83.90 mark. The uptrend appears to be very strong, and there is a great opportunity for forex traders to get in a strong uptrend after a key level break.
 
16/10/'07 - Crude oil and Greenback flying in opposite directions.

Economic News

USD

Yesterday the greenback slipped sharply against the EUR on the back of significant US stock market losses. Nevertheless it managed to gain back some much needed ground against the EUR. The USD was trading at 1.4241 against the EUR yesterday but it managed to rally later on and break the key 1.4200 mark. The main driver of this small greenback recovery was the release of the Empire State Business Conditions Index which surprised on the upside coming in at 28.8, beating the expected figure of 13.0. This Index measures the general business conditions of manufacturers in New York State and it was the only significant US economic event that was released yesterday. This positive data also helped the greenback find some reprieve against the GBP, as although it did not strengthen against the British currency it did manage to hold its ground which is a positive sign as the GBP has been on a sustained bullish rampage against the greenback. On Friday, there was also a string of positive US data, however the greenback fell sharply as the unexpectedly strong PPI figure once again raised inflation concerns for the Fed. However it will be important to monitor inflation as the previous rate cut by the Fed seems to already be bolstering producer prices, so it will be a major concern for the US economy if this results in a significant rise in consumer prices. On the back of last week's FOMC meeting the Fed was expected to once again slash its key interest rate. However, this expectation has been offset by the latest string of robust US data. Yesterday's strong Business Conditions Index reinforced the sentiment that the Fed will not cut the interest rate at the end of this month thereby boosting the greenback.

Looking ahead to today, there is more significant news to be released from the US, kicking off with Industrial Production which is expected to release slighlty lower than last month's figure of 0.2% at 0.1%. Also, Treasury Secretary Paulson will speak today about the housing market, which will be closely followed by investors for hints on the Fed's future monetary policy as a another monetary easing may be what is necessary to help the struggling housing sector. If the recent trend of US data is anything to go by then today's news events, including the Capitalization Rate and the NAHB index, may very well spring another surprise on the upside. However with the current negative USD sentiment and with the ever rising Oil prices, the greenback is likely to remain under pressure.

EUR

Yesterday, the EUR maintained its bullish surge against the USD and the JPY in particular; however it did lose some of its gains on the back of the positive US data. The strong EUR is definitely beginning to be a concern for the European economy as it will dampen growth in the long run and it seems that this topic will be raised in the upcoming G7 meeting. The main reason why the strong EUR will dampen growth is due to the fact that European exporters are finding it harder to compete against the US and the Chinese in the global trading market. Therefore cracks are beginning to appear in the European economy as indicated by recent data because the German economy, which is a major player in the EU, is heavily dependant on exports. Today, the most significant news to be released from the Eurozone will be the German ZEW Economic Sentiment, which measures institutional investor sentiment, this figure is expected to release lower than last month's figure of -18.1 at -22.0. However any negative data is unlikely to cause the EUR to reverse as it has shown its resilience in recent weeks and with the greenback under pressure, the EUR should stay on its bullish path.

JPY

The JPY experienced a whipsaw trading day yesterday, as it fell to 117.91 against the USD on the back of stronger equities. However as stocks began to experience significant losses the JPY recouped and it touched the 117.09 level against the greenback. The US stock market took a tumble yesterday after fresh concerns were raised about global credit. The way the JPY traded yesterday gives a strong indication that there is once again a correlation between equities and the JPY crosses. The fall of US stocks caused investors to drop their carry trade strategy and seek a safe-haven investment, thereby causing the JPY to rally after being sold-off sharply. However in the longer term all the JPY crosses should remain bullish as it seems that carry trades will remain the preferred strategy by investors, as the BoJ is no position to hike its interest rate in the near future. Nevertheless, traders should closely monitor the performance of equities as the correlation between stocks and the JPY crosses has been evident over-and-over again and the future direction of the JPY may very well depend on the performance of US stocks.


Technical News

EUR/USD

The pair is floating in a relatively tight range for several days now, as can be seen on the 4 Hour chart. No significant break through the 1.4240/1.4260 range has occurred, and the hourlies continue to deliver mixed signals. The daily chart is giving a moderately bullish sentiment with a bit more room to run.

GBP/USD

The 4 hour chart notes that a tight bearish channel is forming and traders should seek the breakout to get into the market at a good entry point for a long position. The daily charts are delivering mixed signals.

USD/JPY

There is a local consolidation around 117.40, after a moderate rally. On the daily and 4 H chart indicators seem to be sailing in neutral territory as usually indicates an upcoming breakout of the neutral channel barriers which is located at 117.00 - 117.60. Hedging seems to be the right strategy until the breakout direction will be determine.

USD/CHF

USD-CHF has had a sharp fall during the day and it is coming close to its important Support of 1.1760-50, the lower end of the 1.1900 and 1.1750 range within which the pair has been trading in the last two weeks. The pair could hold at its Support near 1.1760 for the next few hours, however a break below that would result in the pair becoming bearish. If that is seen, then there could be a fall towards 1.1710-00 later on in the day or tomorrow.


The Wild Card

Crude Oil

Over the past two weeks there is an extremely accurate upwards channel forming on the 4 Hour chart. Oil has made a significant move and is displaying a healthy consistent move up with plenty of room to run. The next significant resistance level is around 88.00 which provides forex traders with a great opportunity to jump in to this massive uptrend with large momentum still steaming.
 
22//10/'07 - The Greenback Continues to weaken all accross the board.

Economic News

USD

The USD fell to a record low vs. the EUR and was the weakest in 5 weeks against the JPY after the G7 failed to address the currency's record decline at a meeting of finance officials on Friday. The EUR/USD flew to 1.4347, only to consolidate around 1.4310 later on.

Last week's record lows of the USD were also triggered by a set of dismal statistics, raising expectations that the Federal Reserve will cut interest rates at the end of the month, further weakening the USD. The dollar's drop could also extend during this coming week as the key economic data is likely to show further weakness in the U.S. housing market, deepening on the expectations for the future interest rate cut by the Fed.

Today, there is no significant economic news expected from the U.S markets apart from Fed Governor Kroszner's and Chicago Fed President Evans's speeches that may provide more clues regarding future monetary policy. In addition New Home Sales is due to be released later this week, with expectations currently standing at 770K, the lowest since May 1997. Existing home sales for September are set for release on Wednesday, with economists expecting an annualized rate of 5.25 million, 0.25 million less then in the previous month. It is difficult to see where the dollar strength will come from, until the expectations of further Fed rate cuts will not be deminish.

EUR

The EUR continued on its record setting trend as it closed at a new all time high against the greenback on Friday. By late afternoon Friday trading in New York, the EUR reversed gains to trade 0.2% lower on the day at $1.4260, having hit an all time high of $1.4319 earlier. Meanwhile, European officials continue to be concerned about the EUR's rise against the USD, since it raises the price of exports to the United States and to China. European Central Bank officials said food costs and record oil prices are fanning inflation pressures in Europe, suggesting they may support further interest-rate increases. The ECB has been on a tightening bias for some time, though some officials want it to cut rates to help push down the value of the EUR and boost European competitiveness.

This week's European economic calendar is expected to be quite devoid of market moving events. Most price movement on the EUR pegged currencies will be derived mainly from the U.S events.

JPY

The Japanese currency traded around the 114.05 level against the USD late last week and even touched $113.75, the lowest since Sept. 11. In fact, Yen's strengthening was the clearest outcome of the G7 meeting, as not one of the Japanese Yen crosses have been able to escape the pressure of carry trade liquidation.

The JPY rose to 3 week highs vs. the USD and EUR, boosted by a sell-off in U.S. equities that has become more risk-averse after Caterpillar Inc. slashed its profit estimate and warned the housing downturn was spreading to other parts of the economy. The Japanese currency typically gets a boost in times of increased risk aversion since its low interest rates have funded the purchase of higher-yielding assets in carry trades.The movements in the U.S equity markets will continue to be a predominant driver of the Japanese Yen.


Technical News

EUR/USD

The pair is in a consolidation period around 1.4325 after the touch at the all time high of 1.4345. The momentum is very bullish as clearly displayed by the Hourly charts. The daily chart is showing RSI at the 50 level which indicates that we might see another all time breached quite shortly.

GBP/USD

Both the daily and 4 H charts are bearish. This pair is deep in overbought territory as indicated by the RSI on the 4 H chart. Bollinger bands are tightened indicating decreased volatility. This pair is starting to head down and if the 2.0400 level is breached we could see a sustained bearish trend develop.

USD/JPY

The pair is showing distinct bearish momentum and is currently trading around 113.80. The hourlies are very bearish and are supported by an equally bearish daily chart. It appears that the next target price should be around 113.50. A breach through that level would validate an additional bearish move.

USD/CHF

The pair is testing the very strong and important support level of 1.1610. The 1 Hour chart is showing strong bearish momentum which is contradicted by the bullishness on the daily chart. Waiting for a breach through the 1.1600 level would allow traders to benefit from a stronger downtrend that would probably take the pair to the 1.1540 level.


The Wild Card

Crude Oil

After a breach of the all time high, Oil corrected to the 86.00 level and is now regaining the strong bullish momentum. The daily chart is showing a very bullish stochastic signal which provides Forex a great opportunity to get into a trend that will probably bring the Oil to a new testing of record highs.
 
23/10/'07 - Will The EUR React To Yesterday's Greenback Move?

Economic News

USD

Amidst overwhelming pressure, the greenback gained some ground on what has been a tumultuous fall against other major currencies. The Fed has done its best to curb any further down trends, but with rising concerns in the US economy it is uncertain if anything short of a major announcement can change things. Unfortunately, much speculation seems to tend toward the notion that a credit crunch similar to the one from August will occur forcing the greenback down again.

The weekend's G-7 talks, produced responses from finance ministers and members of the central banks that called for no action to be taken against the plummeting greenback. As a result, investors changed sentiment regarding how far and how fast the greenback was supposed to fall. The USD managed its biggest rally against the EUR since 2005 as investors began to ponder whether or not a turn was in place.

US Treasury Secretary Henry Paulson will speak to today (12:30 GMT) at the US-China Relations Conference in Washington D.C. The speech will focus on economic relations with China and should not have a significant effect on the greenback's movement. As the only scheduled US news event on the calendar today, it will be intriguing to see if the greenback continues to strengthen after yesterday's push.

EUR

The EUR had a volatile day yesterday, having to cope with movement from the US and JPY. It managed to hit all-time highs against the greenback at 1.4348 before tailing off at the day's end to as low as 1.4133. Monday's economic calendar was empty regarding Eurozone news and left the EUR in the hands of global news events. G-7 participants avoided statements that would touch upon the appreciating EUR. The undeniable strength of the EUR has kept European finance ministers and the ECB quiet about changes in economic policy.

ECB President Trichet has tried to echo sentiment that the greenback will find its way back to normal ground, which is proving difficult amidst rising suspicions of the problems in the US economy. However the resilient EUR is now beginning to come under pressure after the recent string of negative Eurozone economic data coupled with a slight shift of investor sentiment. It seems that the EUR bullish rampage is beginning to lose steam and may setup a sharp reversal.

JPY

The JPY has been in the middle of a whirlwind of news events regarding the volatile movement of the greenback. After trading at six week highs against the greenback, the JPY slowly dropped as was assumed it would. Due to unchanged interest rates it was only a matter of time before a sell-off of the JPY occurred. Agreeing with that sentiment, the G-7 gave the go ahead on selling the JPY to ease its demand within the currencies market. Carry trades tailed off especially, due to growing concern in the currency's volatility versus the greenback. The JPY was trading around the 113.50 against the greenback before the G7 meeting and then it slipped to the 114.48 level. The JPY has been on a strong uptrend of late as a result of the risk averse sentiment among investors which has caused a carry trade unwind. However it seems that the negative greenback sentiment may be on the brink of reversing, so this may halt the bullish JPY momentum.


Technical News

EUR/USD

A rising wedge is establishing on the 4 hour chart imply on a bearish trend which may occur tomorrow . Today , Slow stochastic and RSI have a positive slope suggesting the uptrend has much room left to go. The upcoming bullish trend is expected to test the 1.4250 level, and in case of a breach we expect this pair to test the 1.4300 resistance level. Today going long seems to be preferable.

GBP/USD

An upcoming bullish trend is expected when daily indicators (Slow Stochastic ,Momentum and RSI ) have a positive slope . First target price is at 2.0400, if a breakout will take place, next barrier is located at 2.0473. Going long seems to be preferable.

USD/JPY

A 5 Eliot waves structure is establishing on the 1 hour chart offering this pair to consolidate at 114.00 - 114.20 later today. However in the next 3 hours we may see a slight strengthening of the greenback before the reversal will take place.

USD/CHF

The volatility has decreased and the USD\CHF is in a bearish configuration. Dovish moves without trend, and swings around exponential moving averages (EMA 50 and 100). Bollinger bands have tightened. 1H, 4H Elliott pattern implies a continuation of the bearish pressure.The target is expected at 1.1650 so going short seems to be preferable today.


The Wild Card

GOLD

Gold broke the 657.90 resistance level. Gold is in an uptrend supported by 1H exponential moving averages. The volatility is low. Bollinger bands have tightened. Today, we should expect to see a bullish configuration. 1H, 4H Elliott pattern implies that the Gold should gather momentum also today. The target is expected at 659.00 and forex traders may find several opportunities for taking profits today.
 
24/10/'07 - Existing Home Sales, Kroszner and Trichet due to speak today.

Economic News

USD

The USD slipped yesterday, one day after its strongest rally against the EUR in more than a year, as investors braced for September data on the U.S. housing market that is expected to push interest rates lower. The dollar traded at $1.4263 per EUR after falling 0.6%. Today, the USD may decline against the EUR for a second consecutive day ahead of the U.S. industrial report that is expected to show Existing Home Sales sank to its lowest point in 6 years. The Existing Home Sales reports has sparked fears that the data will point to a further deterioration in the housing market and increase the chances of more Federal Reserve interest rate cuts this year. U.S. interest rate futures are priced at roughly 85%, implying that there is a chance of a 0.25 point cut in the federal funds target rate to 4.50% at the end of the Oct. 30-31 policy meeting. In addition to the Existing Home Sales, the U.S Crude Oil Inventories are also on tap today. There are no expectations for that indicator, while the previous month's figure stood at 1.8M. The USD is expected to trade at the $1.4240 to $1.4300 range today.

EUR

The Euro resumed its uptrend, despite the fact that Industrial New Orders from the Euro-zone were released slightly below estimates at 5.1%. Yesterday, the EUR was up 0.4% against the USD and traded at $1.4240 level. The EUR was also up about 0.6% against the JPY, trading at 163.22 Yen, the biggest one-day percentage gain in a month. Meanwhile, the high value of the European currency continues to be a burden on the European economy. European officials are concerned about the EUR rise against the USD, since it raises the price of exports to the United States and to China, as the Chinese have been managing their currency to keep it from appreciating quickly.

Looking ahead, Manufacturing PMI is anticipated to fall back slightly, while Services PMI is forecasted to be a bit more resilient. The ECB President Trichet will speak at 16:00 GMT, and any hawkish commentary will help maintain the Euro's bid tone.

JPY

The Japanese yen dropped against all 16 of the most-actively traded currencies yesterday as risk appetite led to higher equity markets around the world, thus dragging down the JPY. A rekindling of risk appetite put the JPY under pressure yesterday as firmer equity markets prompted some investors to move back into carry trades, where they buy securities in a high-yielding currency funded by borrowing in a low-yielding currency such as the JPY. The Japanese currency lost 0.76% against the EUR and 0.3% vs. the USD yesterday. The JPY traded at 163.70 per EUR and 114.78 per USD. Today's relatively empty Japanese economic calendar left currency traders to react to movements in other financial markets. The movements in the U.S equity markets will continue to be a predominant driver of the Japanese Yen.


Technical News

EUR/USD

A 1,2,3 wave structure is being established on the 4 Hour chart which suggests that this pair will test the 1.4178 Fibonacci level. If this level will breach than next target price is 1.4141, if not this pair is expected to test the 1.4264 resistance level.

GBP/USD

There is a mild bearish channel on the 4 Hour chart that may imply an upcoming bullish trend; however this trend might take place later this week when the first target price is located at 2.0575. In case of a breakout, the next barrier will be located at 2.0620.

USD/JPY

An upcoming bearish trend is expected when the 4 Hour MACD is crossing and the Slow Stochastic has a negative slope. First support levels are located at 114.00 and second at 113.68. Going short seems preferable.

USD/CHF

A bullish flag structure is being established on the 4 Hour chart, however the Slow Stochastic, Momentum and RSI are not supporting the trend. Traders need to look for signs of future positions however there are no signs for today's direction.


The Wild Card

Crude Oil

An upcoming bullish trend is expected as a reversal took place after it failed to break the 84.63 support level. There is a falling wedge structure on the 4 H chart which only strengthens the assumption that a bullish trend will take place. forex traders have a good entry point to get into the the market and to leverage their profits.
 
25/10/'07 - Will key US data provide some light at the end of the USD tunnel?

Economic News

USD

Although yesterdays tremendously dull housing data in the US market declined by 8 percent and the total existing home sales figure dropped to $211,700 from $224,400, the greenback concluded its trading day without almost any significant change. In addition, yesterday the Bank of America announced that it plans to get rid of 3,000 jobs, and that the head of corporate and investment banking will leave after a depressing quarter that led to a 32 percent drop in overall profit. A significant percentage of the job cuts will be in corporate and investment banking; these cutbacks were widely expected after a $1.46 billion trading loss.

Also reported yesterday was the fact that U.S. mortgage requests hardly advanced last week even as interest rates went down to their lowest levels since the month of May. Today at 14:30 GMT three important indexes are going to be published starting off with Durable Goods Orders m/m, which will be followed by Core Durable Goods Orders m/m and the Unemployment Claims figures. These indexes have a significant weight over the market and it seems that they will play a significant role in determining the Fed's decision on whether to cut the interest rate by 0.25% or more.

The US stock market was also relatively stable yesterday with the Dow crossing into positive territory by late afternoon and finishing less than a point lower. The NASDAQ, down 3% earlier in the day, lost less than 1% or 24 points, and the S&P 500 was down just 3.71 points. After trading relatively stable yesterday, the greenback may experience some sharp movements on the back of today's news releases. An upside surprise could drive the dollar on another temporary rally, as was experienced earlier in the week.

EUR

Yesterday, several significant indexes were published from the Eurozone. The most noteworthy were Manufacturing PMI and the Services PMI data. On the basis of these results we could notice that the Eurozone services growth increased much more than was estimated this month, but on the other hand, the manufacturing expansion data showed signs of weakness. Eurozone Manufacturing Purchasing Managers index declined to 51.5 in October from 53.2 in September, it's lowest since August 2005. As it stands the manufacturing sector is losing momentum, and the Eurozone industrial production is beginning to cool a little bit, a situation which may influence the level of employment during the mid-term. In addition, slower growth of manufacturing industrial production and the sharp appreciation of the EUR against the US dollar are additional threatening elements which may bound European exports, and at the same time demand.

The European Central Bank put on hold a planned rate increase in September and left its key rate at 4 percent this month to assess the economic impact of the chaos on credit markets. It will consider cutting interest rates in the short run, and at the same time it must stand ready to stiffen policy in case growth increases.

The release of the German IFO surveys today will provide additional information regarding investor sentiment and many different analysts believe that on the basis of the recent weak US data that the EUR should be able to maintain its bullish momentum against the greenback. However the EUR may experience some temporary dips against the greenback, if US data springs an upside surprise.

JPY

Yesterday the JPY advanced to 114.42 per USD and against the EUR, it gained to 162.75 from 163.70. The JPY increased the most versus the New Zealand dollar, Norwegian krone and Swedish krona, which are carry trade favorites. The JPY got stronger against the world's 16 most-active currencies after the New York Times reported Merrill Lynch losses which stirred some concern, as the investment company's third-quarter losses exceeding initial projections. Merrill Lynch & Co. report $7.5 billion of write-down, selling riskier assets bought with loans in Japan.

In addition yesterday, the Finance Ministry said in Tokyo that Exports rose by 6.5 percent from a year earlier and Imports declined for the first time in more than three years, assisting the trade surplus widen to a record.

Japan's economy is still very dependent on exports and because of this fact, it is very important that demand for emerging markets makes up for U.S. weakness. Exports to the U.S. fell for the first time in more than three years in this period as Japanese companies shipped less automobiles and factory equipment. Overall shipments rose to a record 41.8 trillion yen ($365 billion) as demand in Asia and Europe run forward. Looking ahead, the JPY should continue to steadily rise but much depends on the correlation between US stocks and carry trades.


Technical News

EUR/USD

After this pair dropped to the 1.4186 level, it rallied strongly yesterday breaking well beyond the 1.4200 level. This rally now seems to be losing steam and there are strong indications of another dip. This pair has been whipsaw trading between the 1.4100 and the1.4300 levels over the last two weeks, so the preferred strategy is to sell on highs and buy on dips.

GBP/USD

The 4H chart is indicating that we are deep in overbought territory as the stochastic slow is crossing well above 60 and the RSI and momentum are both negative. However the daily charts are bullish giving a strong indication for further upward movement and if this pair breaches the key 2.0500 level, we could see another sustained bullish run. Nevertheless, caution should be exercised when placing intraday trades as the 4H chart does give a bearish signal.

USD/JPY

This pair has been on a sharp bullish rally over the last 24 hours and all indications are still bullish. Both the 4H and the daily charts are very bullish as the stochastic slow is crossing deep in oversold territory, while the RSI and momentum are positive. Target today will be to breach the 114.00 level.

USD/CHF

Bollinger bands are widened so we can expect increased volatility. This pair is forming a flag configuration on the 4 H. So if we see a breach beyond the 1.1700 level, there should be at least another 50 pip downward. However at the moment it is still too early for this pair to be heading south as all charts are giving a bullish signal. If the 117.00 level is not breached today, this pair will give a push upwards.


The Wild Card

Crude Oil

Crude oil is once again heading purposefully towards $90 mark, looking to once again break its all time high. Bollinger bands are widened indicating increased volatility. The upward momentum is still strong providing Forex traders with a good opportunity for profit taking. However charts are indicating that the bullish run is nearing its peak so we may see a sustained reversal soon.
 
29/10/'07 - USD Hits All-Time Lows Again.

Economic News

USD

Yesterday, the USD dropped to record lows against the EUR due to speculation that the Federal Reserve will cut interest rates later this week as the U.S. housing slump reverberates throughout the economy. Interest-rate futures show around a 90% chance that the Fed will lower its 4.75% overnight lending rate between banks by at least a 0.25% point on Wednesday. In addition, the greenback will find little support given the sharp rally in Crude Oil that has already reached the 92.60 level. Upcoming U.S economic data does not look to help the greenback either. The currency faces major risk this coming week with the release of the Consumer Confidence report, the GDP, the Manufacturing Index and the Non-Farm Payrolls. The aforementioned are expected to show relatively weak figures in comparison to previous months, thus dragging the USD further down. Facing a run of weak U.S. economic data, the USD may drop as low as $1.4500 against the EUR this week.

There could be some movement when former Fed Chairman Alan Greenspan speaks today at a hedge-fund summit in Bermuda. Short of that, there is no real market moving news to be released from the U.S markets. Volatility is soaring, and while the greenback is likely to remain weak and oil strong in coming days, all of this wild price action creates the potential for steep corrections throughout the market.

EUR

The EUR hit another record high of 1.4420 against the greenback yesterday, and it may simply be a matter of time before the currency jumps above the 1.4500 barrier, ahead of the possible U.S interest rate cuts on Wednesday. Analysts estimate that this could add to the European Central Bank's dilemma over the next move for Euro zone interest rates as well. The European currency's gains came despite the weaker-than-expected German Consumer Confidence survey, which dropped to a seven month low of 4.9 last week. The decline in Consumer Confidence is not very surprising, as energy and food prices have soared and left Europeans with less retained income for arbitrary spending. The ECB is unlikely to raise interest rates before year end - barring a major increase in inflation figures - which provides far less fundamental support for the Euro at current levels. The Euro Zone economic event risk will pick up this week with German CPI and German Employment Change data due on Monday and Tuesday, respectively. Traders should watch for any particularly surprising results in either measure. Later, markets will be left to trade off of relatively non-market moving Euro Zone Consumer Confidence and CPI figures, while Friday PMI manufacturing data is unlikely to force volatile moves in the EUR.

JPY

The market has recently shown trends of a rise in trading in high-yielding commodity currencies. This, coupled with gains in Asian equity markets, helped boost risk appetite and encourage investors to put on carry trade bets funded by cheap borrowing in the Japanese yen. The JPY was little changed against the USD and traded at 114.17 level yesterday. Today, we will see the release of Overall Housing Spending. This should have an effect on trading with the JPY as consumer spending in Japan accounts for roughly half of the overall GDP.


Technical News

EUR/USD

The pair has breached a fresh all time high and is now floating at 1.4420. Both the 4 Hour and daily charts are showing a bearish cross on the slow stochastic, which indicates that there might be a correction back to the 1.4360 level before the next peak will be tested.

GBP/USD

The cable is going through a very strong up trend, and we can see new momentum on the hourly charts growing stronger. The daily chart indicates that the next target price might be around 2.0620.

USD/JPY

The pair is in the middle of a flat channel on the daily chart. The two consecutive doji bars indicate that a move is quite imminent, as the RSI is well below the 20 level. It appears that if the 114.00 level will not be breached, than a bullish move will be initiated that might take the pair above 115.00 again.

USD/CHF

The pair is floating around a major support level of 1.1600. At the moment the pair is failing the break, and is trading at a 30 pip range. If a breach through the 1.1600 level will occur, than we will probably see a very strong downtrend continue to the 1.1500/1.1550 levels.


The Wild Card

Crude Oil

After peaking at an all time of 93.15, Crude Oil seems to be calming down a bit, and is now at a correction move. There is a bearish cross forming on the daily chart indicating that it might be a great opportunity for forex traders to go short on a very strong potential correction move. Next target price appears to be around 92.00.
 
30/10/'07 - National Home Price Index & Consumer Confidence On Tap

Economic News

USD

The fate of the greenback will continue to be questioned today, as the decision to cut interest rates by the Fed is imminent. Halloween (Wednesday October 31st) of all days looks to be the one that will see the US Federal Reserve make, what has become nothing short of an obvious move regarding the US economy. Though the dollar remained relatively unchanged yesterday, forex investors continue to expect the fall of the greenback.

Today will see the release of two key reports that are anticipated to add to the gloomy US economic picture. Firstly, the release of the S&P/ Case-Schiller National Home Price Index is expected to give negative results for the eighth month running. The report measures the changes in prices of single-family homes within 20 major metropolitan cities, and will most probably contribute to the falling trend of the greenback. One hour later at 2PM GMT, we will see the release of the Consumer Confidence report. Expectations are equally as disappointing; as the report is set to hit 11-month lows and solidify the Feds need to cut rates.

The past weeks have been historic, with the greenback hitting all-time lows against its European counterpart. While traders prepare for the Fed's statement we shouldn't expect any drastic changes in recent trends, as the greenback continues to suffer.

EUR

The Euro faced some losses against the greenback yesterday, due in some part to the growing assumption that the European banks are set to report more losses. Mortgage defaults and other credit issues have dulled the European economy's strength and snapped five straight days of gains against the greenback. Speculation surrounding the ECB raising interest rates is gaining steam, as inflation numbers continue to stay strong. Yesterday, German CPI numbers came back stronger than expected, strengthening the idea that rate hikes are still to come. The EUR/USD traded in and around the 1.4400 level yesterday, going no lower than 1.4375 Today the European economic calendar is relatively empty, with the release of the German Unemployment Rate as the only slated event. It is safe to say that most of the day's movement with the EUR will be directly related to the aforementioned news in the US. As the US economy continues to disappoint, we can expect the EUR to stay strong and continue to prosper.

JPY

The JPY fell yesterday as global stocks continued to rise. The JPY found itself being used to finance loans for traders interested in more volatile positions. Using the JPY for loans in such investments saw the Japanese currency fall just over 0.5% against the EUR to 165.40. The JPY saw its prices fall against fifteen of the most regularly traded currencies on the market.

Yesterday, the release of Japanese Household Spending numbers came back higher than excepted. Today, Manufacturing PMI is said to do the same, as the JPY looks to recover from its drop on Monday. Amidst the rise in oil prices and gold trading at a 27 year high, there is a influx of investment in nations with a strong commodity base. If these trends continue we should see the JPY stay on its downward trend.


Technical News

EUR/USD

On the 4 H chart we notice that the bullish trend is running ahead. The volatility is increasing, especially after the pair has broken the 1.4425resistance level. The price should continue to move upwards in a range of 1.4350 to 1.4460. As it stands, the bullish pressure will continue to gather momentum on the EUR USD today as well.

GBP/USD

On the 4 H chart, a rising wedge (bullish) is forming which may imply a continuation of the bullish trend; it's recommended to time the entrance to the market with short term charts, 2.0600 seems like a strong entry point. At the moment GPB USD is being traded around 2.0500 to 2.0700 range. As the volatility today is low; bullish pressure on the GBP should be expected. The uptrend should continue on 2.0680 resistance.

USD/JPY

The pair is floating in a relatively tight range for several days now, as can be seen on the 4 Hour chart. No significant break through the114.50-115 range has occurred, and the hourly continue to deliver mixed signals. The daily chart is giving a moderately bullish sentiment with a bit more room to run.

USD/CHF

The USD CHF is in a bearish configuration. The volatility decreases. USD CHF moves without trend and swings around exponential moving average (EMA 50 and 100). Bollinger bands have tightened. 1H, 4H Elliott pattern implies a continuation of the bearish pressure. The target is expected at 1.1610 .


The Wild Card

Gold

There is a bearish channel forming on the daily chart, as the gold is floating on the upper level of it. The slow stochastic has completed the cross above the 80 level, which validates the move as bearish. This provides forex traders with a great opportunity to enter a short position with great bearish momentum.
 
31/10/'07 - Interest Rate Statement On Tap

Economic News

USD

Yesterday, the greenback continued to trade on a slippery slope and although it only lost some slight ground against the EUR, it did slip significantly against most of the other majors. Yesterday was relatively light on U.S data with the main event being the Consumer Confidence figure which released well below the expected 99.0 at 95.6. This additional piece of negative data only marginally increased the problems of the fragile greenback, which has been under immense pressure the entire week ahead of today's release of the Fed's Interest Rate Statement. The current widespread market expectation is that the Fed will slash its key interest rate by 0.25%. Therefore if the Fed disappoints investors by holding back a rate cut then it will risk upsetting the still-fragile markets and harming the economy. The rationale behind a rate cut by the Fed is too prevent the rising oil prices and falling home values from driving the U.S economy into a recession. Following the Interest Rate Announcement will be the Fed Statement which will be closely followed by investors who will be on the prowl for any hints on future monetary policy changes. It seems that the Fed would probably come out with an open-ended statement that will shy away from promising any future rate cuts. Since if the Fed hints towards future rate reductions then the greenback will head towards another freefall and it will also revive inflation concerns, which will be problematic for the U.S economy in the long run. In the beginning of October the majority of traders believed that the Fed will cut the interest rate by at least 0.75 % at its next meeting. However they scaled down their expectations to 0.25% on the back of the revised August payroll numbers, which now showed a gain instead of a decline. Nevertheless there has been fresh market turmoil over the last two weeks as there have been further signs of weakness in the housing sector combined with dismal earnings reports of major U.S banks and therefore this has again prompted some investors to believe that the rate cut will be greater than 0.25%.

There is another host of significant U.S data to be released today which includes the ADP Non-Farm Payrolls Report, the Annualized GDP and the Annualized GDP deflator figures. Although the Fed Interest Rate Announcement will be taking centre stage today, it will also be important to watch the ADP report which will give the market an indication of the all important NFP report that we can expect on Friday. The greenback should experience some sharp volatility today and if the interest rate is released inline with expectations then the greenback will continue to plummet before the recovery process can begin.

EUR

The EUR continued its bullish rampage against the greenback yesterday mainly being driven by investor expectations of a U.S rate cut today instead of actual EUR strength, as the European currency traded indifferently against most of the other majors. The widening growth differential and the tightening interest rate differential between Europe and the U.S has caused the EUR to trade in unknown territory against the greenback, breaking all time highs more than once in the last few weeks. Today, there is a string of data to be released from the Eurozone which includes the German Retail Sales, Consumer Confidence, CPI, Italian CPI and ending of with Eurozone Unemployment Rate. However these figures will be insignificant today as all eyes will be on the Interest Rate Announcement by the Fed and therefore most of the EUR volatility today will be pegged to the greenback.

The continuous strengthening of the Eurozone currency has been making it more difficult for European exporters to compete on the global market. This has been particularly felt in Germany which is heavily reliant on exports and since Germany is a key player in the Eurozone economy we should see some drawbacks on overall European growth begin to appear. Therefore the state of future growth and inflationary concerns will be key determinants in the ECB's monetary stance, however for now, with regards to the direction the EUR against the greenback, the ball is in Bernanke's court.

JPY

Earlier today, during the Asian trading session, there was the release of the Japanese Average Cash Earnings. This figure measures the monthly change in the wages paid to jobholders and it released in negative territory at -0.5%, which was well below the expected figure of 0.2%. However the main news event to be released out of Japan earlier today was the BoJ's interest Rate Statement, which remained unchanged at 0.5%. Deflation still remains as a real concern of the BoJ and until it reaches a favorable target level it is unlikely that the BoJ will be in a position to hike rates.

The Japanese interest rate release did not have any significant impact on the JPY as the market seems to be holding its breath ahead of today's U.S interest rate announcement. Therefore the JPY managed to hold on to its recent gains and it may even push further upwards against the USD today if the Fed cuts the interest rate, which could also encourage a future carry trade unwind.


Technical News

EUR/USD

Today, the 4 Hour chart implies on a possible recovery of the USD when both RSI (78) and Slow Stochastic (crossed at 82) are clearly in overbought territory. The 4 Doji bars imply on an upcoming move and it appears that going short might be preferable.

GBP/USD

On the 4 H chart we can see the Slow Stochastic crossed at 88 which is clearly in overbought territory and we expect for an upcoming reversal which will lead to a bearish trend. Meanwhile there is still room left for another strengthening before the reversal will take place.

USD/JPY

The pair is going through a choppy session in the past few days, and gives mixed signals on the hourly level. The daily chart is still showing a light bullish formation and it looks as if the pair is heading 116.00 again. A preferable strategy might be to wait for the hourlies to unwind before going long. Going short seems risky at this point.

USD/CHF

A strong bullish configuration is forming on a 4 hour chart. The volatility has increased. Hourlies are showing that the pair moves without a clear trend and swings around exponential moving average (EMA 50 and 100).


The Wild Card

Crude Oil

Oil is consolidating at 89.50 after it has been going up for more than three weeks from 80.50. The slow stochastic on the daily chart is showing a strong bearish cross, and together with inability of the oil to breach through the strong resistance it delivers a great opportunity for forex traders to go short at a great entry point.
 
01/11/'07 - Fed Cuts Interest Rate By 0.25%, Market Reacts Accordingly.

Economic News

USD

The main story yesterday was the much anticipated announcement of US Federal Interest Rate cuts. The Federal Open Market Committee (FOMC) cut rates by one quarter point to 4.5% to help change the trends in the struggling US economy. Traders saw the EUR, GBP and CAD make significant gains on the greenback, with the volatile news period not helping to change the greenback's fate by all that much. It is important to note that losses over a seven day period versus the EUR were halted, however the general trend looks to continue to be prevalent. EUR/USD hovered for most of the day around 1.45, while the cable hit 26 year highs. The Canadian dollar reached its highest point in almost 50 years against the greenback as there was no stopping the maple leaf. Not all the news was bad yesterday, as US growth numbers were positive, putting the onus on other Central Banks to evaluate possible rate hikes. The greenback has continued to endure agonizing results with essential commodities like Crude Oil and Gold, leaving traders with tough decisions on how long to hold onto positions with the USD.

Today's economic calendar is once again crowded with essential news from the US. Core PCE Price Index, Personal Spending, Personal Income, Unemployment Claims, ISM Manufacturing Index and Prices should continue to push the greenback down. Some investors are still concerned that the only positive information released from the US is not backed by real data quite yet. This sentiment has shown itself in trading as the rate cuts yesterday only slightly changed the continued trend in the market in regards to the greenback. It will be intriguing to see if today's news events can provide enough real data to shift trends to relieve some of the heighted stress on the greenback.

EUR

The EUR hit all-time highs once again versus the plummeting greenback, after yesterday's Fed rate cut. Floating at high levels the whole day, the European currency staved off any news time volatility to stay strong. Speculation is that the ECB will need to raise interest rates to combat the soaring inflation from within its members' economies. Doing so could come sooner than later, as US the economic data has not shown much promise as of late.

Today, the EUR stays off the economic calendar, with relevant news coming from only the UK and US. It will be the focal point of many investors over the next couple of days to monitor the relationship between speculative growth in the European economy and the key changes in US economic policy. Yesterday, in the statement released by the Feds, there was mention that "the upside risks to inflation roughly balance the downside risks to growth.'' Comments like these will only further the concern from the ECB over how to handle their currency in relation to the greenback. It should be interesting to see if investors continue to back the rise of the EUR/USD or if they retreat over concerns of a change in trends.

JPY

Amidst the whirlwind of records set against the greenback yesterday, the JPY managed to stay proportionately neutral. Following Japan's announcement that interest rates will stay at 0.5%, Governor Fukui reiterated the Bank of Japans statement noting slowed economic growth in the country. After abandoning initial ideas that consumer prices in Japan would rise, there was not much surprise that rates stayed the same. As Japan is dependent on the growth of the global economy, the latest news from the US will inevitably lead the Japanese to make some changes to avoid damaging the JPY. With the fate of the JPY in the hands of outside factors, look for the JPY to continue to produce volatile results over the coming days.


Technical News

EUR/USD

After a touch at the unbelievable level of the 1.4500 yesterday, the pair eases a bit and now consolidates around 1.4460. The EUR/USD seems to be ignoring technical key points and is simply breaking record highs one after the other. Although charts are showing bearish crosses on the 4 Hour chart and the daily chart, it appears that the momentum is stronger than ever, and that another peak at the 1.4500 should probably return shortly.

GBP/USD

The cable is going through a massive uptrend, as the momentum refuses to calm down. Hourly charts are packed with positive sentiments and are slightly contradicted by a moderately bearish daily chart. Going long in the short run appears to be preferable today.

USD/JPY

The pair still floats within the wide range of 113.00/177.00 with no distinct direction. It appears that the current move is up, and the local sentiment is quite bullish. The 4 Hour chart is indicating that the next target price could be around 116.40.

USD/CHF

The pair is floating at a very strong support level that revolves around 1.1580 and is showing some difficulties breaching through it violently. The sentiment on the daily chart is floating at neutral levels whereas the hourly charts are very bearish. Staying out of this pair until the smoke clears might be a smart move.


The Wild Card

Crude Oil

Oil has breached through the all time high of 96.00 and even touched the 96.20 at some point yesterday. The momentum is stronger than ever, and there is a strong belief that oil is running to the 100$ a barrel soon. This is a great opportunity for forex traders to get in at great entry point and ride that unbelievable trend.
 
06/11/'07 - USD weakness continues on all fronts.

Economic News

USD

Amidst once again surprising economic numbers, the greenback stayed relatively steady on Monday. The greenback did fall in the early hours of Tuesday, against 14 of the 16 major currencies, challenging investors to determine how and when the greenback will end its slide. The Institute of Supply Management (ISM) released its Non-Manufacturing index at 55.8, up one point from its previous 54.8 mark; forecasts initially predicted a one point drop. The index measures the activity of purchases made by purchasing managers in the service sector and allowed the greenback some breathing room after last week's disaster. Yesterday, saw Fed Governor Mishkin announce that he will "carefully assess economic data" before considering any changes in US economic policies. As oil prices continue to rise and the US financial landscape is in turmoil, the Fed has held its ground in defending its decisions to hold out on any further action.

Traders are at a standstill due to the differences in opinion between the majority of investors and the Fed's themselves. Many investors believe that the US will have no choice but to cut rates even more in order to withstand the damage that the winter will bring in regards to gasoline prices. The Fed, in statements released by Mishkin, Rogers and Gross reiterated their faith in economic data, and went so far as to say that the quarter point interest rate cut could even be reversed if all went well before year's end.

Today look to see even more discussions regarding such issues as Fed Chairman Ben Bernanke speaks in San Antonio. Bernanke will address the audience at the ACCION Texas Summit on Microfinance, about community development. It is safe to say that the market will fluctuate around the time of his speech, as Bernanke is known for leaving hints regarding future policies in his speeches.

EUR

The EUR entered this week in positive territory as it finished last week with all-time highs against the greenback. News has been dominated predominately by the US, but this week sees the tide change with major news events on the EU schedule.

Investors saw the EUR/USD move yesterday between a low of 1.4440 and highs at 1.4530 levels. Similar range trading should be expected today as there are no real major events on tap. PPI, Retail Sales and Service PMI are to be released this morning, with not much movement expected to come from them as investors will try and hold positions ahead of Thursday's ECB Interest Rate statement. Sentiment is that the ECB will hike rates to offset current economic trends regarding the EUR. Today should see much of the same in regard to the EUR as investors will most likely see the EUR stay strong.

JPY

Yesterday, BOJ Chairman Toshihiko Fukui Spoke and hinted that a future interest rate hike might take place sooner that we expected. Since then we saw the JPY strengthen against all across the board. Fukui added that a timely interest rate hike is needed and that keeping rates too low could pose risks in the future that the BOJ would like to avoid. We are expecting the JPY to maintain its strength against the majors, and carry trades are more likely to reduce especially against the USD until the rate hike will take place. Tomorrow, Core Machinery Orders is expected to be released. The figure measures the total value of new orders placed with machine manufacturers, excluding orders for items with a volatile sales cycle. The forecasted figure is -2.0% which is better in comparison to the previous figure (-7.7%) implying a rising trend which is a positive effect on the JPY ,since if the manufacturers increase their purchasing of machinery it signals that the manufacturing industry is in an expansionary phase.

It appears that the JPY will continue to float on relatively quiet waters, and that the direction will be directly effected by the ongoing USD weakness.


Technical News

EUR/USD

Daily and hourly indicators are in neutral territory which indicates range trading today, traders need to pay attention to the bullish flag structure which is establishing on the 4 H chart and may signal an upcoming bullish trend however not yet completed. In case of completion, this pair may head to 118.83 the Fibonacci resistance (61.8%) and then going long seems to be the preferable strategy.

GBP/USD

After losing more than 230 pips in the last three days, the bearish sentiment continues. The daily charts are showing that there is still more room to run and the hourlies are showing a light oversold status. A preferable strategy might be to look for a good short entry point.

USD/JPY

Recent unwinding move seems to have bottomed at 114.00 and the pair has gone up since Friday. The daily studies are bullish, and the hourlies support the bullish notion. A breach through 115.00 will validate the move, and create a great opportunity for a long run buying position.

USD/CHF

The bearish rally continues at full steam, and is confirmed with extremely bearish dailies. The hourlies are a bit oversold, which indicates that traders should look for a high entry point before resuming the down trend which appears to have plenty of room to run. A breach through 1.1495 will validate the move and take it to the 1.1480 zone


The Wild Card

Crude Oil

The strong momentum continues. Crude Oil now consolidates around 94.90 with a clear intention to continue the uptrend. The dailies are showing the third consecutive bearish cross. That provides Forex traders with a great opportunity to establish an entry point and continue the bullish ride.
 
07/11/'07 - Greenback Staring Down the Barrel

Economic News

USD

The bearish trend on the greenback continued yesterday as it once again got weaker against the sixteen most actively traded currencies, but mainly against the Cable and the 13 nation currency. The greenback's value kept falling yesterday, and has reached a new record low against the EUR at 1.4663.

The belief of many Forex traders has been that even more pain is yet to come for the U.S. economy. We are only in the first phase of the tumultuous state of the weakening US economy, as banks in the United States are yet to reveal all the losses that have occurred in the mortgage sector. We are still expected to witness additional downward slides which will create further pressure on the greenback in the short and long term, as we saw on Sunday when Chuck Prince, CEO of the U.S. bank Citigroup quit, taking the blame for unexpected losses of $8-11 billion before taxes.

The greenback is 12.5% weaker against the EUR than it was a year ago, compared with a 3 percent slide against the JPY and a 5.4% drop against the Chinese Yuan.

The dollar looks to decline more as the outlook of lower Fed rates will stimulate investors to alter assets into higher-yielding currencies. It seems like the huge losses from subprime-mortgage and the credit crisis will continue to grow and emphasize uncertainty, which will only obligate the Federal Reserve to cut interest rates on Dec. 11, the third time this year.

EUR

The EUR kept up its forward progress in a firm and solid direction against the US dollar on Tuesday, even after the U.S. Federal Reserve cut interest rates by a quarter of a point last week. The EUR and the GBP have been hiking steadily against the US dollar since August, due to uncertainties in the strength of the U.S. economy, on the basis of the subprime credit crisis. Yesterday the 13-nation EUR traded at $1.4556 in morning sessions, down from its record high of $1.4545, and as it is expected the US dollar may fall to $1.50 against the EUR by the end of the year. The U.S. economy is on course for a serious slowdown and still faces upcoming pressure. Outside of the US growth and a weaker dollar there are boosting exports from the US to Europe. Many investors began recently to relocate numerous funds to European countries where their deposits and mixed income investments can obtain higher returns. The Euro is being pushed forward by sentiment that the European Central Bank is working slowly but surely to increase rates. The pound will benefit from expectations that the Bank of England will not touch rates, and will leave them safe and sound rather than follow the Fed in cutting the cost of borrowing.

JPY

Yesterday, the JPY fell against all sixteen of the most-actively traded currencies. The JPY declined to 166.74 per euro, and may fall to 167.50 per euro today. Australia's dollar strengthened 1 percent against the JPY while New Zealand's currency gained 2%. In addition, yesterday saw Japan's index of leading economic indicators published. The index dove to zero for the month of September after a mark of 27.3 in August. The index hit zero for the first time since December 1997.

The Bank of Japan kept again its benchmark borrowing cost at 0.5% last week, the lowest among major economies but still the JPY is being considered as a favored currency among many investors for carry trade positions for the long term.


Technical News

EUR/USD

The 4 Hour bullish channel was breached and the new all time high was set at 1.4664. The Momentum and RSI indicators still correlated and have a positive slope, thus indicating a possible continuation of the current bullish trend. Traders should wait for the reversal which may take place soon and is expected to test the 1.4577 Fibonacci support level.

GBP/USD

An opposite head & shoulder structure is establishing on the 4 Hour chart, indicating the continuation of the current bullish trend. 2.1050 is the next resistance level which this pair is going to test. Going long seems to be preferable.

USD/JPY

A falling wedge structure in a bearish trend has been established on the 4 Hour chart which may bring this pair to test the 113.00 support level. It should not however break the level and therefore going long at this value might be preferable.

USD/CHF

An opposite 1 2 3 wave structure is establishing on the daily chart offering this pair to consolidate at 1.1100 in the long term.
An opposite 5 Elliott waves is establishing telling us that this pair should test the 1.1300, in case of a breakout the next support level is located at 1.1253.


The Wild Card

GOLD

A bullish channel was established on the 4 Hour chart and a breakout took place which caused the Gold to strengthen to 845.28. Currently, the slow stochastic and RSI indicators are clearly on overbought territory and Forex traders should anticipate a reversal. There is still room for the Gold to strengthen before any such reversal takes place.
 
08/11/'07 - ECB Interest Rate Statement, Crude Oil nears $100

Economic News

USD

Yesterday, U.S. stocks fell, erasing gains that were made since the Fed's Sept. 18th interest-rate cut, which accelerated a sell-off in the U.S. currency. The dollar slid even further after comments from senior Chinese officials stirred concerns about China's central bank shifting reserves away from the U.S. currency. As a result, the USD has been dragged down to its lowest point in 30 years against a basket of six rivals yesterday.

Meanwhile, the recession of the housing sector is progressing. Following the downdraft from the housing industry spreading to other sectors, traders increased wagers that the Fed will lower its benchmark interest rate to 4.25% by the end of the year. Futures contracts show that the odds of a 0.25% point rate cut at the central bank's Dec. 11 policy meeting are currently standing at 70%. There are also a lot of concerns about the health of the U.S. economy in general and the greenback seems to be losing its status as the major global currency.

Today the most significant news coming out of the US will be the Unemployment Claims. The figure is expected to be released at 320K, slightly better last month's mark of 281K. Later, at 15:00 GMT, Fed Chairman Bernanke is scheduled to speak about the economic outlook during his testimony in Washington DC. Bernanke is known for dropping clues during his speeches, as it is the FOMC's tenet to keep the public aware of their monetary policy before interest rates are changed. Heavy market volatility is often experienced during Bernanke's speeches. Recent price action in the EUR\USD suggests that the aggrandizement of the currency pair may not stop at least until the 1.50 level is breached. According to our internal data, positioning has not reached extremes, as traders continue to fade the move.

EUR

The EUR surged vs. the USD, on track for its biggest one-day percentage gain this year, sending European stocks down nearly 1%. The European currency hiked after Chinese officials suggested that their country should look to diversify its 1.4 trillion dollar currency reserves into stronger currencies and explicitly mentioned EUR, which sent the single currency flying to fresh record highs. Yesterday, the EUR raced to an all-time high of $1.4730, before retreating to $1.4627 in the late evening, still up 0.7% on the day. It's likely that the EUR will reach 1.50 against the USD, but whether or not this will happen soon will be dependent upon ECB President's Trichet comments at today's news conference regarding the interest rate statement. The European Central Bank has kept a 4% overnight lending rate for the last four policy meetings. The ECB is expected to announce today, that it will keep interest rates unchanged. The central bank's statement and the news conference, in which President Jean Claude Trichet will offer up the monetary policy's outlook on growth and inflation, could trigger a strong move from the high flying EUR. Failure from Trichet to show any displeasure with the EUR rally at today's press conference will most likely trigger a move to $1.50 per Euro.

JPY

For the past two weeks, the JPY had been trading in a range, but yesterday broke downward, closing in on a two month low. A sharp rise in risk aversion only exacerbated the greenback's downfall against the JPY, with the USD losing a substantial 200 pips to lows of 112.66 JPY. Growing uncertainty on the global economy, which faces rising losses from the credit crisis, was fed by higher oil prices, encouraging investors to unwind carry trades funded in JPY, thus boosting the Japanese currency. The impact of the high JPY is a substantial worry for the Japanese economy and if Crude Oil does rise as expected toward the $100/barrel level, this will lead to rising gas prices and start to really have an impact on the already dampening Japanese domestic demand.

Today, Japan's economic calendar gives us the release of Machine Tool Orders and the Eco Watchers Survey; neither of which should be particularly significant in moving the market. The JPY may push further upwards against the USD today following Fed Chairman's Bernanke speech.


Technical News

EUR/USD

After the touch at the all time high of 1.4735, the pair now consolidates at 1.4630 and appears to be heading to 1.4600. The momentum is very bullish on all fronts, especially on the 4 Hour chart, where we see a bullish cross forming, which will probably take the pair higher, back to the 1.4700 level.

GBP/USD

The cable is in the midst of a very strong uptrend which peaked at 2.1060 yesterday. The hourly charts are showing that a certain correction is imminent, while the daily charts are showing an intensive bullish sentiment. It looks as if the 2.0900 level might be reached before the cable breaks an additional record level.

USD/JPY

The ongoing wide range the pair has been going through in the past two months has been violently breached. The USD/JPY is steadily heading to 112.00 which is a key support level. A breach through the key level will validate a much deeper downtrend that might end at 111.00 on a weekly perspective.

USD/CHF

The 1.1250 level failed to be breached yesterday, and was marked as a very strong support for the pair. The 4 hour chart is indicating a strong bearish momentum and dailies support the notion that we might see 1.2175 today. Looking for a good short entry point appears to be preferable today.


The Wild Card

Crude Oil

The uptrend the Oil is going through at the moment is probably the strongest trend in world markets today and has massive implications on world wide economy. Forex traders have a fantastic opportunity to join a trend which is supported by much more than the technical indications we see in the hourly and the daily charts. A great entry point might be available at the moment as the pair now floats around the bottom section of the 4 hour channel and might be a great entry point for Oil's journey into the 100$ zone.
 
Veterans Day - US Market Is Closed. Japan's GDP on tap

Economic News

USD

Since the beginning of last week, the USD posted a modest rebound on expectations that this week's U.S. economic data will help to determine the condition of the biggest economy. Last week's US calendar showed a poor picture for future growth and inflation prospects, with Import Price Index going sharply higher and Consumer Confidence is at its lowest in 2 years. Following the string of that disappointing data, Fed's Chairman Ben Bernanke offered a relatively pessimistic outlook for domestic growth and inflation prospects last Thursday, stating that the U.S. GDP expansion would slow considerably in the final quarter of this year. Bernanke also forecasted that inflation will remain elevated through the same period.

These trends leave the traders with the difficult prospects of slowing economic activity. Moreover, investors worry that financial institutions have not yet revealed the full impact of the turmoil triggered by the subprime crisis, fearing that more U.S. financial firms will be hit by credit market turmoil, which will subsequently influence the U.S. currency. High energy prices are also a key factor in the latest slowdown. With Crude Oil reaching almost $100 a barrel, consumers are forced to cut back on a very large spectrum of purchases.

Today, the U.S. market will be closed due to the Veterans Day Holiday but the rest of the week is expected to be quite full with economic events that will indicate whether Federal Reserve Chairman Ben Bernanke was right to be more worried about growth than inflation. The forecasts for October Retail Sales are low, currently standing at 0.2%. Later, Producer and Consumer Prices might surprise to the upside given the rise in food and energy prices. In addition, Pending Home Sales, the Empire State Manufacturing Survey and the Treasury International Capital flow report are also expected during the week.

EUR

Last week was a very extreme week in Europe, as most of the European currencies were traded at record level, including the EUR which topped a new all time high 1.4745, and the GBP that touched 2.1150 which is a level we have not seen in more than 26 years. It was quite clear that the situation is mostly deriving from the ongoing crisis in the US market much more than EUR strength.

The most important piece of data expected to come from Europe today is the UK PPI Input and Output at 9:30 GMT. The Index measures the rate of inflation (i.e., the rate of price changes) experienced by manufacturers when purchasing goods and services. The expectations on the input release which is the important of the two are lower than last month's 3.2% and now stand on 1.5%. The release might cause the GBP to continue it local correction against the crosses. Other than that the calendar is quite empty, and together with closed US markets, we should have a calm trading day with low volumes and liquidity.

JPY

The JPY was the biggest beneficiary of the last week. Risk aversion has dominated and we've seen the carry trade unwind on credit-market concerns. The Japanese currency rose 11% against the USD since the end of June and has hit a 1.5 years high on Friday as fears of wider credit-related losses at U.S. financial firms dulled investor's appetite for risk, the causing an unwinding of carry trades.

The JPY is now trading at 110.15 level and we estimate that if the Yen will break below 110.00 it would probably continue to 105.00 before heading up again. By now, falling house prices and high energy costs had pushed the U.S. consumer confidence to its lowest. Fear is predominant in the market that the worst is not behind. As a result, all risk is getting liquidated and the JPY benefits tremendously when the carry trades fail to return.

This week, the Japanese economic calendar will be relatively packed with major news events starting today with quarterly GDP. Later on Tuesday, an Interest Rate Announcement will be followed by the BOJ's Governor Fukui Speech during which traders will look for clues on future monetary policy action. Wednesday will seal the string of Japanese macro data with an Industry Activity Index with the figure expected to release in negative territory at -1.0%. Apart from that, the JPY will also be determined by if there is any further write-down news from U.S. financial institutions. If there are more to come, then the yen has more chance to appreciate.


Technical News

EUR/USD

After topping at the all time of 1.4745, the pair now corrects to the 1.4640 level, and appears to be having some more bearish momentum. There is a bullish cross starting to form on the 4 hour chart and showing that the move up will probably resume shortly. The target price will probably be around 1.4710.

GBP/USD

After a massive uptrend that took the cable to the 2.1150 level, the pair is now in the midst of a very aggressive corrective move. The hourly charts are showing that the trend still has momentum, and if the 2.0750 level will be breached a validation of a longer corrective move will occur. Selling the cable on the short run appears to be preferable.

USD/JPY

The breach through the wide range is showing the full power of the bearish momentum. The pair is trading at the 110.00 levels, and another bearish move is quite imminent. All the indicators are showing that the bearish momentum has not yet said its last word, and a target price of 108.00 will no be a big surprise.

USD/CHF

There is a very strong support level that the pair is establishing at the 1.1200 level. 3 consecutive doji bars on the 4 hour chart are showing that some kind of move is imminent. The aggressive bullish cross is showing that as for now the support level might hold, but further indication should be found in the hourlies as the smoke clears. As for now the hourlies are neutral.


The Wild Card

Crude Oil

The oil has created a local low at 94.80 and is now gathering the momentum for the continuation of the journey up. The RSI on the 4 hour chart is floating at 50 which provides forex traders with a great entry point to join the bullish wagon. 96.00 appears to be a valid target price for the current move.
 
13/10/'07 - Pending Home Sales on Tap.

Economic News

USD

Yesterday, the greenback continued it's much needed recovery and it made some significant gains against the EUR and the Sterling. The main reason for the USD rebound this week was concern that U.S Banks will continue to project credit related losses and this caused carry trades to unwind. The leading financial institutions in the U.S have already reported more than $50 b in losses and many investors are sure that there is more to come. Therefore this created a risk-aversion scenario as investors reduced there risk abroad and backed away from investing in higher yielding currencies. Last week, Fed Chairman Bernanke created more negative sentiment surrounding the greenback by stating that the he expects the rising oil prices to increase inflationary pressures and that there will be a significant U.S economic slowdown in the near future. However ,with investors now shying away from carry trades and with losses in financial stocks expected to spread globally, the greenback may just be able to hold on to its positive momentum particularly against the Sterling and other higher yielding currencies despite losing some ground this morning. Nevertheless, the majority of analysts believe that this was just a corrective move upward and that the main trend of a bearish dollar will prevail.

Yesterday, there was no significant economic data released from the U.S as the country celebrated the Veterans Day Holiday so the greenbacks rally may have been slightly exaggerated. Today, there is no market moving news expected from the U.S and the market will look ahead to the CPI, PPI and Retail Sales figures, which will be released later on this week, and will help investors better gauge the state of the U.S economy and the direction of future interest rates. For today, traders can expect less volatility and the greenback should be able to maintain its positive momentum as investors remain risk-averse.

EUR

Yesterday, the EUR dropped sharply against the USD on the back of widespread risk aversion by investors. There is a hint of negative sentiment beginning to surround the EUR as investors fear that the ECB will intervene in the currency markets by selling its own currency in order to protect exports and growth as the EUR rises further. The German economy is heavily reliant on exporters and it is one of the key players in determining Eurozone growth performance, so the ECB will be hesitant to see the EUR strengthen any further. Therefore the current risk aversion sentiment coupled with a possible intervention by the ECB in the currency markets will dampen any upward resurgence by the EUR.

There was no significant data released from the Eurozone yesterday. Today the most important news that will come out of the European market will be the German Zew Economic Sentiment, which is expected to release below the previous figure of -18.1 at -19.5. This figure measures the institutional investor sentiment and it will give another indication to the market of whether the strong EUR has made a noticeable negative impact on the Eurozone economy.

JPY

The JPY strengthened all across the board yesterday on the back of a sharp carry trade unwind driven by the turmoil of major U.S financial institutions. The Japanese interest rate, at 0.5%, is the lowest in the industrialized world and so it gained significantly against all the other major, particularly versus the carry trade favorites such as the AUD and the NZD. However, the bullish rampage of the JPY was halted earlier today during the Asian trading session on the back of speculation that BoJ Governor Fukui will hint at leaving interest rates unchanged in the near future. The main reason for this speculation is that the decline in the housing sector will significantly jeopardize economic growth. Earlier today, the Japanese interest rate statement remained unchanged and released inline with expectations at 0.5% but all attention will now be focused on BoJ Governor Fukui's speech. Although carry trades have unwounded very sharply, if Fukui hints at leaving interest rates unchanged then the JPY will lose more of its recently gained ground, particularly against the USD and the EUR.


Technical News

EUR/USD

There is a bullish configuration forming on the 4 Hour chart. The volatility is high and the EUR/USD is not in a consolidation stage, especially after the pair has returned to the 1.4628 resistance level. The price should continue to move upwards in the 1.4600-1.4730 range. As it seems, the bullish pressure will continue to gather momentum at least until the week end.

GBP/USD

In the past few days the pair is going through a choppy period, and is giving mixed signals on the hourly level. The daily chart is showing massive bullish formation, and it looks as if the pair is heading 2.0800 again. A preferable strategy might be going long for the short run.

USD/JPY

A significant bearish trend is shown on the daily chart and it seems that there is still steam left for the continuation of the JPY strengthening as the Slow Stochastic ,RSI and Momentum still have a negative slope.

USD/CHF

The RSI and Slow Stochastic support the current bearish trend when the next support level is located at 1.1222, in case of a break out we may see this pair breaking the 1.1200 and heading for 1.1173.


The Wild Card

Gold

The 4 Hour chart implies that the current bullish trend is to maintain its momentum and when the first barrier is located at 807.28 and expected to breached since the Slow Stochastic ,RSI and Momentum are supporting this bullish trend. forex traders may use this opportunity to go long which seems preferable today.
 
14/11/'07 - U.S Retail Sales, PPI on Tap.

Economic News

USD

As has been the case for the last several weeks, the US news cycle should have a great effect on how the greenback responds versus the most actively traded currencies. The greenback had seen some gains from late trading last week into early this week, only to see it weaken again yesterday. Investors continued their cautious behavior avoiding risk-laden trades while awaiting today's economic schedule.

Today, the dominant US news consists of Retail Sales and Core Retail Sales figures, as well as the PPI and Core PPI reports. Retail numbers are forecast to come in less than in previous months, however even if there is a rise in such numbers, it doesn't look like it will effect the already tenuous trader sentiment versus the dollar. As short term price action helps to slow down greenback losses, traders are gearing up for how the Fed will react to the deteriorating state of the dollar.

The release of the aforementioned events is to be followed by a speech at the 25th annual Monetary Conference in Washington D.C. by Fed Chairman Ben Bernanke. Bernanke is slated to discuss FOMC communications; however it is safe to assume that he will address questions regarding the day's consumer reports as well. As has become the norm, we should expect some volatility in and around the Fed Chairman's speech, as he is known for leaving hints of future US policies. As more important information is still to be seen before weeks end, we should see the greenback continue once again to fall in today's trading.

EUR

Yesterday saw the release of the German ZEW survey fall to its lowest point in fifteen years. Still, the EUR returned to its latest form against the greenback as it gained throughout the day. Euro-zone businesses continue to strengthen amidst much more negative views from analysts. The likelihood of the ECB hiking interest rates continues to grow as even the troubled German economy has staved off effects from the strengthened 13 nation currency and continues to bring promise to traders. The ECB will keep a close eye on Crude Oil prices as a significant rise toward $100 per barrel will only solidify the inevitability of an ECB interest rate hike. On the contrary, there are several treasury officials pressuring the ECB to wait with the rate hike since they think the EUR is overvalued, which severely hurts Euro zone exporters and has a negative impact on all of the Euro zone economy .

Today's economic calendar in Europe is highlighted by German GDP numbers, which are expected to be high, as well as words by ECB President Trichet. The president will speak in Paris at a conference held by Banque de France and Fédération Bancaire Française at 8:00 GMT. With the lion's share of news coming from the US and the UK, the euro-zone should look to see steady growth to continue with yesterday's trends.

JPY

The positive trends in carry trades continues after yesterday's interest rate decision which left the interest rate unchanged and once again pushed the JPY down today. Still being affected by remarks made by Bank of Japan Governor Fukui, the JPY slid against the 16 most-actively traded currencies, most versus the Aussie and New Zealand dollars. With equity growth being shown across the board, investors are more inclined to invest in risky positions thus driving down low yielding currencies such as the JPY.

The Japanese calendar is relatively barren for the rest of the week, with only two minor news events scheduled. Today's Tertiary Industry Activity Index along with Thursday's release of Monetary Policy meeting minutes, should do little to change the JPY. It has become more evident that the movement in the JPY is in the hands of the sub-prime mortgage crisis in the US coupled with growth in EUR dependability. Uncertainty, of which there is a lot these days, is what can hurt the Japanese currency the most. In Fukui's words, "As the global capital markets undergo a re-pricing of risks, financial markets continue to be unstable". It is imperative to keep an eye out on the coming day's news events from Europe an the US to properly gage the direction of the JPY, all signs now continue to point down.


Technical News

EUR/USD

The Pair was range trading yesterday between a support level of 1.4590 and a resistance level of 1.4620. Should the pair trade today above the pivot level of 1.4675 we could see a break through the resistance level and then the bullish trend for the EUR/USD could continue up to the 50% Fibonacci Level. An outbreak through the resistance level instead could indicate a drop down to 1.4550, the 0% Fibonacci level.

GBP/USD

The 4 hour chart indicates on an upcoming bullish trend when the long term Moving Average (Weighted 21) crossed by a bullish bar. Additionally the ADX (Average Directional Movement) also strengthens our opinion while the DI+ is on its way to crossing the DI- from below which is considered a bullish signal. Going long seems to be preferable.

USD/JPY

The pair moved yesterday with a slightly bearish trend between the upper level of 110.50 and the lower level of 109.20 slow stochastic on the hourlies indicates that it won't become a reversal soon and that the pair might instead continue range trading today. Also MACD and RSI reside in neutral territory and thus point to an uneventful day for the USD/JPY.

USD/CHF

The 4 hour chart implies on an upcoming bearish trend as the Slow Stochastic crossed at 78 and has a negative slope, however we need to pay attention to the current 4 hour bar, when a positive bar may indicate an upcoming bullish trend and negative bar will imply range trading. Traders need to be aware during the next 4 hours where the market is headed and to take action.


The Wild Card

Silver

There is still a bearish configuration on the 4 Hour chart, indicating that the momentum is still down. The RSI is floating around 50, which supports the notion that there is still plenty of room to run. This provides forex traders with a great opportunity to go short on a very solid downtrend.
 
15/11/'07 - CPI Data on Tap.

Economic News

USD

The greenback resumed its downhill slide against the EUR yesterday, although it did recover slightly later on, as problems in the U.S housing sector coupled with credit woes still making investors negative towards the U.S currency. Although the USD slipped against most of the high yielding currencies, it did manage to gain some noticeable ground against the GBP on the back of the BoE's disappointing inflation report, which highlighted the fact that the BoE is facing weaker growth and higher inflation. There are many analysts that believe that the Fed is intentionally keeping the greenback at low levels in order to improve the competitiveness of U.S exporters against the Chinese in the global market and this is possibly the main driver of the current negative market sentiment surrounding the dollar. The Fed has lowered its key interest rate in its last two meetings and it is expected to do so again next month, with the main aim of preventing the U.S economy from hitting a recession. However the main sector that this rate cut has benefitted so far has been the U.S stock market which has recently been reaching all time highs, but the financial, automobile, manufacturing and housing sectors are all in a slump or in a so-called “recession”. Therefore maintaining a weak dollar may be the best option for the Fed in order to maintain growth and prevent the economy as a whole from falling into the recession pit.

There was also a string of significant data released from the U.S yesterday that did not help the greenback's cause. Although the headline Retail Sales figure released inline with expectations at 0.2%, the core figure came in slightly below the previous figure of 0.3% at 0.2%. Also both the headline and core PPI figures released lower than expected at 0.1% and 0.0% respectively. Looking ahead to today we are expecting the CPI figures along with the Empire State and Philly Fed manufacturing surveys. These figures may surprise on the upside which will temporarily boost the fledgling greenback. However it will be important to note if the lower producer prices have been passed on to the consumer. The general picture for the greenback is very much bearish as this seems to be inline with the Fed's long term objective of sustainable growth, however there will be rallies on its way down as the market continues to push the USD into oversold territory.

EUR

The EUR resumed its bullish rampage against the greenback yesterday as the grey cloud continued to hover over the U.S currency. However the EUR did struggle to maintain its gains despite the strong European economic data released yesterday. The most significant news released from the Eurozone yesterday was the German GDP figure which released slightly better than the expected figure of 0.6% at 0.7%. The stronger EUR may be explained as the main driver of Tuesday's weaker German investor sentiment report, as the German economy is heavily reliant on exports, and this may have raised speculation that the ECB will intervene to halt the EUR's sharp climb. However yesterday's positive German GDP report negates the possibility of ECB intervention as there is no reason for the ECB to intervene if the economy is expanding.

It must be stated that the possibility of a direct ECB intervention in the currency markets is highly unlikely but nevertheless it will be considered if the strengthening EUR begins to dampen Eurozone growth. In the meantime the ECB seems to be moving step-in-step with the Fed with regards to its view on the current price of the greenback and the EUR. Therefore although the EUR is currently faltering slightly due to European inflation concerns still being skewed on the upside, the longer term picture for the EUR is still rosy.

JPY

The direction of the JPY is heavily reliant on whether carry trades are the preferred strategy. There has been a strong correlation between carry trades and the performance of the Dow Jones, and therefore the JPY has had a sharp rise of late. However earlier today, during the Asian trading session, the JPY lost some of its gained ground against most of the majors. This hiccup in the JPY bullish path was as a result of speculation that Japanese mutual funds were investing in higher yielding countries, in other words carry trades were once again the name of the game. Also there was negative news released out of Japan as the Tertiary Industry Activity Index released below the expected figure of -1.0% at -1.6% and this did not help the JPY's cause. There will be more news out of Japan tonight as the BoJ Monetary Policy Meeting Minutes will be released. It seems that the future direction of the JPY could heavily depend on the performance of the Dow, however in the meanwhile the carry trade unwind may be set to continue.


Technical News

EUR/USD

The pair is showing signals of fresh bullish momentum, and has already corrected back the entire fall to 1.4540. Traders should observe the 1.4700 level as an additional break through that resistance level would validate the bullish move.

GBP/USD

After dropping 600 pips, the cable is consolidating around 2.0590. The hourlies are showing moderate bullish momentum, yet the overall direction is surely down. 2.0550 is a key support level, and a breach will confirm that the pair is going to the 2.0400 levels, probably before the weekend.

USD/JPY

After a touch in the 109.00 level and a correction back to the 111.50, the bearish momentum is back. There is a bearish cross on the 4 hour chart that indicates a correction, probably to the 110.00 levels. The dailies are showing that the bearish momentum is also valid for the longer run.

USD/CHF

The pair is showing strong bearish momentum and is now testing the 1.1200 level. A violent break through that level will probably take the pair to the 1.1140 zone quite quickly. On the upper side, 1.1250 is a very strong resistance, that if breached we might see a correction to the 1.1320 level, before resuming the bearish grand move.


The Wild Card

Gold

The bearish momentum is accumulating power, and appears to be back on track. There was a 130 pips correction that appears to be over, and gold is now ready to continue its bearish move to the 780.00 level. This could be a great timing for forex traders, as gold is still traded at a relatively high price which could be an excellent entry point.
 
Will The US Unemployment Claims Reverse The Greenback Trend.

Economic News

USD

Yesterday the greenback weakened sharply all across the board on the back of the release of the FOMC Meeting Minutes. The greenback slipped to new all time low against the EUR touching the 1.4852 mark, as the minutes gave another strong indication to the market that the Fed will once again cut rates in order to prevent the U.S economy from slipping into recession. The Fed indicated that it expects U.S growth to slow to between 1.8 and 2.5%, which is much lower than previous forecasts. Therefore the Fed is now expected to cut rates by at least 0.25%, in order to stimulate growth by attempting to alleviate the housing and credit crisis.

However, the dollar selling began well before the FOMC Minutes with the release of weaker than expected Building Permits figure. This figure was forecasted to come in at 1.20M but it released at 1.18M, showing a sharp drop from last month's figure of 1.26M. This downside surprise increased the pressure on the greenback as it indicated that the earlier rate cut by the fund is struggling to provide the housing slump with some reprieve and it raised concerns of curbing future economic growth. There was some positive news for the greenback as the Housing Starts figure released better than expected, but this was greatly overshadowed by the negative Building Permits figure and by the FOMC Minutes. The weakness of the dollar yesterday also caused commodities to become more appealing to investors and this shoved Crude Oil passed the key $99 mark. The rising price of oil coupled with the continued subprime crisis will put immense pressure on the U.S economy. However the weak dollar may cause exports to boom as U.S exporters become more competitive on the global market.

Looking ahead to today, the most important news to be released from the U.S will be Unemployment Claims, which is expected to release slightly weaker than last month and Consumer Sentiment, which is forecasted to remain unchanged. If these figures do not cause any major surprises then the greenback should consolidate today after dropping to record lows yesterday. However the dollar sentiment is still very bearish and this is not likely to change in the near future, particularly since many analysts believe that it is in the Fed's interest to maintain a weak dollar.

EUR

The EUR continued its bullish rampage against the greenback hitting another record high. Although the EUR has been a very resilient currency since its inception, yesterday's new high was driven mainly by the negative sentiment surrounding the greenback as opposed to actual EUR robustness. The only news released from the Eurozone yesterday was the German PPI, which came in at a beating expectations figure of 0.4%. This was another positive sign for the EUR as Germany is one of the key players in the European economy. However the strong EUR may concern the ECB as Germany is heavily reliant on exports, but so far there have been no noticeable indications that the strong EUR is dampening growth. Today is also relatively light on Eurozone news as we are only expecting the Italian Retail Sales figure and it should not have any impact on the EUR. After yesterday's sharp spike against the greenback, the EUR may retreat slightly today but with the negative dollar sentiment being so strong, it will target new highs against the fledgling U.S currency in the near term.

JPY

Carry trades continued to unwind yesterday as the volatility of the currency markets is steadily raising the cost of hedging. Therefore since the carry trade strategy mainly involves borrowing from Japan where interest rates are low, the unwind has caused the JPY to gain significantly in recent weeks. The JPY continued to rise yesterday against the greenback after disappointing news put more pressure on the U.S currency. Also the JPY managed to maintain its bullish trend against the high yielding currencies as U.S subprime mortgages widened.

Earlier today, during the Asian trading session, the Japanese trade balance released slightly lower than the expected figure of 1.08T, at 1.07T. Also the All Industries Activity Index, which measures the change in spending for goods and services, released in negative territory at -1.6%. However this could not stop the JPY's positive momentum which should continue in the near term on the back of increased risk aversion.


Technical News

EUR/USD

After yesterday's ascending triangle breakout shown on the 4 hour chart, brought this pair to an all time high of 1.4856, as an upcoming bearish trend is expected. This might send the pair to the 1.4775 (Fibonacci 76.4%) support level before gathering some new energy. Going short for the short term, seems to be preferable today.

GBP/USD

Today, this pair may hover between 2.0695 - 2.0571 as an upcoming bearish trend is expected and the first target price is located at 2.0637 (Fibonacci 76.4%) support level. In case of a breakout this pair may test the 2.0572 (Fibonacci 50.0%) second support level. Going short seems to be preferable today.

USD/JPY

The daily chart is showing a continuing bearish trend and we may see this pair consolidate at 107.70 within the next 5 days. Today, a bearish channel is establishing on the 4 hour chart which indicates the continuation of the current bearish trend and could break the 109.00 level. Going short seems like the preferable strategy.

USD/CHF

The 4 hour chart implies that an upcoming bullish trend is expected as the RSI and Momentum indicators are showing a positive slope, and the Slow Stochastic is crossed in oversold territory. Today, going long might be preferable.


The Wild Card

Crude Oil

An upcoming bearish trend is expected as the Slow Stochastic is crossing on overbought territory. It is supported by the RSI which is also hovering at overbought territory and with a negative slope offering a reevaluation to 97.45 USD per barrel. Forex traders should be patient and seek an attractive entry point for a long position somewhere below 97.45 USD.
 
22/11/'07 - US Market Closed for Thanksgiving.

Economic News

USD

Yesterday, the USD posted a mixed performance ahead of today's Thanksgiving holiday in the US, remaining relatively unchanged against major currency counterparts. The greenback continued to hover around record lows against the EUR as expectations that further Federal Reserve interest rate cuts were reinforced by the Fed's projection that the U.S. economic growth will probably slow next year. Federal Funds futures now show that traders predict a 90% chance of a 25 basis point rate cut during the FOMC's December 11th meeting. Such clear interest rate expectations can only hurt the dollar further through short-term currency trading.

The sentiment regarding the U.S. dollar continues to worsen after the Fed stated that tighter credit conditions and high energy costs would likely slow the U.S. growth next year by between 1.8% and 2.5%, sharply below its previous forecast.

Today, all U.S. financial markets are closed due to the Thanksgiving. During the holiday, relatively narrow trading ranges are expected, while recent volatility shows that traders are willing to force major moves ahead of the typically illiquid Thanksgiving holiday. Trading volumes should remain increasingly thin and we believe that risks remain for a slowdown in price movements in the days ahead.

EUR

There was a significant pullback in European stocks yesterday. European shares staged their largest daily fall since the onset of the credit crisis in August. Crude Oil and EUR prices hit record highs yesterday, as local exporters were the ones most greatly affected by the price jump. The EUR hit a record high of $1.4870 against the USD before easing to $1.4833. Since the middle of August, the currency pair has appreciated 11% in total. The hawkishness of the ECB and the remarkable resilience of the European economy have contrasted sharply to the increasingly dovish bias of the Federal Reserve and deterioration in the US economy. By now, the FED is the only major central bank actually lowering interest rates while everyone else is either on hold or raising them. Thus, until the ECB lowers rates, the greenback's weakness could continue.

With the US markets closed today for the Thanksgiving holiday, the European currency looks to be in for a test, as plenty of EUR economic data is due to be released. This includes the EUR Current Account, the GBP quarterly Business Investment, the Euro zone Industrial New Orders and BOE Deputy Governor Lomax Speech, adjourning the trading session. With the greenback coming under fire in the last few weeks, there is still room for the EUR to reach new heights. We estimate that the 1.50 level still remains the next target for European currency.

JPY

The JPY surged to its highest level against the USD in more than 2 years yesterday, as investors pared back exposure to risky trades on worries about credit market losses and the health of the U.S. economy. The Japanese Yen hit a record high as global stocks weakened and Crude Oil pushed toward $100 a barrel. Japanese products are continuing to become more and more expensive in other countries. Losses in global credit-markets are fueling the JPY rise, while Japanese companies are continuing to struggle with slowing economic growth in the U.S., their largest market for exports. The Japanese government's efforts to revive the economy after more than a decade of inconsistent growth, does not seem to bear fruit.

Given the closed U.S. markets and a lack of data on the Japanese side as well, we can expect to see the JPY trading around the 109 level with a possibility of a slight depreciation against the USD.


Technical News

EUR/USD

A rising wedge structure is forming on the 4 hour chart as the pair now floats at 1.4818 - 1.4860. The 1.4818 level might be a good entry point for a long position. If that level is breached, a bearish correction move will be validated and might take the pair to the 1.4780 level.

GBP/USD

A bullish channel is establishing on the 4 hours chart, as the top barrier is located at 2.0731. It seems preferable to go long and wait for the upcoming reversal at 2.0717- 2.0731 and to consider entering short position.

USD/JPY

The 2 hour chart implies that the bullish trend is out of steam and has failed to break the 109.15 (Fibonacci 38.2%) barrier. The JPY will probably continue to strengthen; as the bearish momentum on the daily chart is extremely strong. Going short appears to be a preferable strategy today.

USD/CHF

After a failed attempt to breach through the 1.1000 level, the pair now consolidates around 1.1020. There are very intensive bullish crosses forming on both the 4 hours and the daily charts which indicates that we might see a correction on the local level. It looks as though we will see the pair touching the 1.1060 before dropping again and resuming the bearish course.


The Wild Card

Crude Oil

The bullish trend has returned with full power, and it appears that Oil will probably be heading to $100 a barrel quite shortly. All oscillators are very bullish and there is a great opportunity for forex traders to jump in the strong bullish trend before the $100 bonanza begins.
 
26/11/'07 - Greenback Looks To Rebound After Strong Black Friday

Economic News

USD

High Liquidity is the name of the game after the Thanksgiving holiday, as traders are back in the market after low trading volumes, and high price movement. Last week we saw the EUR/USD continue to break all-time highs only to reverse sharply on Friday, leaving the EUR/USD floating at a distance of 100 pips below those highs. Risk appetite returned to the Asian markets after better-than-expected Black Friday sales suggested that U.S. consumer spending would remain solid towards the end of the year. ShopperTrak RCT Corp, who tracked sales at about 50,000 U.S. retail outlets, reported that combined sales on Friday and Saturday rose 7.2% on a y/y basis, while total sales on Black Friday rose by 8.3% y/y. We need to understand that during this period, for the Europeans, America is one big discount bin, thanks to the current weak dollar that slid this week to another record low against the EUR. As a result, tourists are spending thousands to travel to the United States to snag blockbuster bargains on everything from iPods to designer clothes and handbags. This situation is injecting funds into the US economy with no manipulation activity which gives hope to the falling greenback. The aforementioned foreign economics' sources noted that shopping behavior is one of the majors' remedies of the US economy to fight and deal with the credit crunch which was caused by the subprime mortgages crisis. It still appears that the worst is still ahead of us and the USD may weaken even more, which will make the US exporters delightful and the importers more worried especially if they are paying with a foreign currency.

EUR

The EUR posted new lifetime highs against the USD in holiday thinned trade on Friday, pushing beyond 1.4900 to post an intraday high of 1.4968 as the USD index made a sustained break of 75.00. The Euro reversed in overnight trade however, with investors pushing it back below 1.4900 The EUR did hit record highs against the USD, but was unable to sustain such levels as ECB Governing Council member Ordonez said that he saw a greater-than-expected economic slowdown in the Euro zone and that there was not enough data to dispel uncertainty about the effects of the financial market turmoil. Overall the EUR/USD traded with a low of 1.4775 and a high of 1.4930 before closing the day at 1.4830. ECB President Trichet and various ECB officials are scheduled to speak today and we expect that they will continue to speak about the potential economic slowdown which could threaten the EUR economy and may cause a reduction in the EUR currency against the majors today. Euroland PMIs returned with mixed results for the month of November. The advance PMI results for November showed a partial rebound in manufacturing but a renewed decline in services, which combined to pull the composite PMI down to its lowest in over two years. This is consistent with the less up-beat message from other business surveys, suggesting that Euro strength, high oil prices, a shaky banking sector and concerns about the US economy are all taking their toll on European business confidence.

UK GDP growth was revised down a tick from 0.8% to 0.7%, as we expected, although 0.7% growth is still considered to be above the long term trend growth rate (2.5% yr). Also, the details in the report showed private consumption spending unexpectedly accelerating to 1.0% in Q3, its fastest pace for the year so far. The report does not unequivocally support for the case for a near-term rate cut from the Bank of England. Bank mortgage approvals fell to just 44.1k in October, which according to the British Bankers' Association was the lowest on record. Full industry figures will be published by the BoE next week. Generally, it seems that the major currencies (the EUR especially) versus the USD are still seeking the equilibration point that local economies would be able to deal with. To avoid the recession which is being threatened in those economies according to economic status we can clearly determine that the US economy is gloomier compared to the Euro zone which only strengthens the assumption that we are ahead of another EUR strengthening before the greenback will recover.

JPY

The JPY enjoyed a market holiday on Friday causing thin trading conditions during the Asian session. The JPY initially weakened as risk appetite returned to Asian markets. The USD/JPY was choppy as it found buyers early after Asian equities opened strong. Sellers pushed the JPY crosses lower after reports that China would invest some of its foreign exchange reserves in Japanese stocks. The news that China would invest in Japan has some interesting implications which may be reflected on today's trading session, as a JPY strengthening is more likely to take place. Recently, global equities have been positively correlated to the JPY crosses because of risk reduction. Leveraged portfolios that are both long equities and JPY crosses, must sell if either goes down to generate liquidity. However, if China invests in Japan, this could cause a negative correlation between equities and the JPY crosses as China must buy JPY in order to buy Japanese stocks. Japan's benchmark Nikkei stock index climbed more than 2.0% on the news. A Chinese official told the Nikkei business daily that it would begin investing in Japanese shares 'soon' without giving a firm time frame. The China Business daily reported that China's sovereign wealth fund (CIC) is to join Baosteel, Shougang Group and Angang Group to make a bid for Rio Tinto, adding that the group's offer could be valued at around $200B. Rio Tinto's share price spiked up about 8% on the news, and managed to hang on to gains after thw CIC denied the press speculation. China's Steel Association added that it had not heard of plans to bid for Rio Tinto. Most analysts agree that regulatory issues make a CIC bid for Rio Tinto quite unlikely. We expect to see the JPY strengthen against the majors and maintain its positive momentum against the USD.


Technical News

EUR/USD

After touching the unbelievable all time high of 1.4950 on Friday, the pair is calming down a bit, and is correcting to the 1.4800 level. The bearish momentum on the 4 hour chart is expected to continue today, with a high possibility of an additional bullish break this week. The bearish consolidation will accumulate the momentum.

GBP/USD

The cable is in the middle of a corrective move after bottoming out at 2.0350. It is forming a bullish channel on the daily chart. The momentum is moderate, and a breach through the 2.0700 will validate the next move to 2.0800.

USD/JPY

The intensive bearish avalanche continues with full strength, and it appears that nothing is likely to stop it in the short run. The hourlies are fully supportive of the bearish move, and a breach through the 108.20 will unleash an additional drop probably into the 107.50 levels. Going short appears to be quite preferable.

USD/CHF

The pair established a strong support at the 1.0900 level, after failing to break through that level on Friday. There seems to be a local correction, and we might see the 1.1150 level again before the pair will resume the bearish trend. Selling on high key levels might be preferable today.


The Wild Card

Crude Oil

The 98.00 barrier was not breached overnight, and Crude Oil is making another move up. The momentum on the 4 hour chart is high and the daily charts are starting to follow. This could be a great entry point for Forex traders to enter the bullish move on great price.
 
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