Month: February 2009

Source: FOREXYARD

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

Economic News

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

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

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

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

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

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

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

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

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

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

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

Oil – Oil Plummets on U.S. Stimulus Doubts

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

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

Technical News

EUR/USD

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

GBP/USD

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

USD/JPY

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

USD/CHF

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

The Wild Card – Oil

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

Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Source: FOREXYARD

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

Economic News

USD – USD Regroups after Negative News for Euro Banks

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

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

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

EUR – EUR Plunges on Russian Loan Restructuring

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

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

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

JPY – Traders May Look for Further Weakening in the JPY

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

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

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

Oil – Oil Settles below $40 Ahead of Inventory Data

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

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

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

Technical News

EUR/USD

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

GBP/USD

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

USD/JPY

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

USD/CHF

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

The Wild Card – Gold

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

Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

News released out of the European Union today showed that the German international trade balance registered a trade surplus of 6.9 billion euros in December following a revised 9.9 billion euros in November. According to data released from the Federal Statistical Office of Germany, Germany’s annual trade surplus also fell below the level of December 2007 which produced a surplus of 10.5 billion euros. Market forecasts had expected a surplus of 8.2 billion euros for the European Union’s largest economy in December. Total year-over-year surplus data showed that Germany’s trade surplus was 178.2 billion euros in 2008 following a total surplus of 195.3 billion euros in 2007, a decline of 8.7 percent.

Exports fell for the third straight month in December with a decline of 3.7 percent to 67.4 billion euros while imports decreased by 4.1 percent to 60.4 billion euros. Compared to December 2007, exports have fallen by 7.7 percent while imports have decreased by 3.3 percent. Despite the recent exports decreases, Germany was the world’s top exporter for the sixth straight year in 2008 according to a story by Reuters citing information by the WTO, just narrowly beating out China for the top honor.

Germany’s current account increased to a 12.3 billion euro surplus in December following a 8.7 billion euro surplus in November. The total current account surplus for Germany in 2008 was 162.5 billion euros compared to a surplus of 180.8 billion euros in 2007.

Euro mixed in Forex Trading.

The Euro has been mixed in forex trading today versus the other major currencies. The euro has gained versus the US dollar as the EUR/USD opened trading today at approximately 1.2953 dollars per euro and has advanced to trading at 1.3020 in the afternoon of the U.S. trading session at 2:58pm EST.

The euro has been falling versus the British pound today as the EUR/GBP has declined to 0.8731 from 0.8773. The euro has gained ground versus the Japanese yen as the EUR/JPY has advanced to 119.12 after opening the day at 118.51. Elsewhere today, the euro has declined versus the Australian dollar and New Zealand dollar while gaining against the Swiss franc and Canadian dollar.

EUR/GBP Chart – The Euro falling against the British Pound today in Forex Trading. The Euro has been in a downtrend versus the Pound since establishing a new alltime high currency exchange rate in January.

Source: FOREXYARD

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

Economic News

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Technical News

EUR/USD

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

GBP/USD

Narrow range trading continues as the pair did not make a significant move in either direction, and is currently traded around the 1.47 level. The 4-hour chart RSI is already floating in the overbought territory. It appears that the possible next move might be a bearish one. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

USD/JPY

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

USD/CHF

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

The Wild Card – Silver

Silver prices rose significantly in the last 2 weeks and peaked at $13.07 for an ounce. However, daily charts’ RSI is floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for
forex traders to enter the trend at a very early stage.

Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

U.S. Nonfarm Payrolls employment data released today showed that jobs fell by more than 500,000 for the third straight month as the employment decline almost reached 600,000 in January. The Department of Labor nonfarm payrolls report showed that U.S. payrolls shed 598,000 jobs in January following a revised drop of 577,000 jobs in December and marked the largest monthly payrolls drop since December 1974. November’s payrolls data was newly revised to show a loss of 597,000 jobs after last month’s revision had shown a drop of 584,000 jobs.

The three months straight of over 500,000 jobs lost marked a first in the history of the government report and the amount of jobs lost since December 2007 has totaled 3.6 million. January’s jobs losses were more than expected as economic forecasts were predicting a decline of approximately 540,000 workers

January became the thirteenth straight month that companies have shed workers as the unemployment rate surged to 7.6 percent from 7.2 percent. The sharp increase in the unemployment rate brought the rate to its highest standing in over 16 years and also surpassed market forecasts expecting the rate to increase to 7.5 percent.

The decline in jobs was spread throughout most economic sectors with the exception of the education & health services sector which saw 54,000 jobs created in January and in government hiring which created 6,000 jobs. The goods producing sector was the hardest hit by job losses for the month as the manufacturing sector cut 207,000 jobs and the construction sector lost 111,000 jobs. The service-providing sector lost 279,000 total jobs with professional & business services shedding 121,000 workers, retail trade cutting 45,000 workers and leisure & hospitality losing 28,000 workers for the month.

U.S. Dollar lower in Forex Trading.

The U.S. dollar has been losing ground in forex trading against most of the major currencies after today’s dismal employment report. The dollar has fallen against the euro, Australian dollar, Swiss franc, New Zealand dollar and the British pound while managing to gain ground versus the Japanese yen.

The euro has advanced in trading versus the dollar from today’s 1.2784 opening at 00:00GMT to trading at approximately 1.2889 in the afternoon of the US trading session at 12:36pm EST. The British pound has increased versus the dollar as the GBP/USD has gone from its 1.4603 opening rate to trading at 1.4774 in the U.S. session.

The Australian dollar has surged versus the USD with the AUD/USD trading at 0.6741 after opening today at 0.6520. The New Zealand dollar has also made strong gains versus the US dollar as the NZD/USD trades at 0.5306 after opening the day at the 0.5123 exchange rate. Against the Swiss franc, the USD has been falling today after gaining for the last two days as the USD/CHF has declined from its 1.1728 opening to trading at 1.1690. The dollar is virtually unchanged against the Canadian dollar currently after the USD/CAD opened at 1.2356 earlier today to trading later at 1.2358 despite making an intraday high of 1.2542.

The dollar has managed to make gains against the Japanese yen as the USD/JPY has climbed from its 90.86 opening to trading at 91.87 later today.

GBP/USD Chart – The British Pound advancing against the US Dollar in Forex Trading today after the US jobs report.

Source: FOREXYARD

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

Economic News

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

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

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

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

EUR – EUR Fluctuates as ECB Keeps Interest Rate Unchanged

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

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

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

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

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

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

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

OIL – Oil Makes Light Gains in Early Trading

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

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

Technical News

EUR/USD

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

GBP/USD

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

USD/JPY

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

USD/CHF

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

The Wild Card – OIL

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

Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

The Bank of England announced the decision to cut its interest rate by 50 basis points for the second month in a row today. Today’s rate reduction brings the rate to 1.00 percent from 1.50 percent and marks the lowest interest rate level since the establishment of the bank in the late 1600s. The rate cut was widely expected and matched the market forecasts which were predicting a 50 point reduction. The BOE has now sliced off 4.00 percent from its interest rate since October in a bid to help the declining British economy.

The BOE statement accompanying the rate decision commented on the economic conditions stating, “In the United Kingdom, output dropped sharply in the fourth quarter of 2008 and business surveys point to a similar rate of decline in the early part of this year. Credit conditions faced by companies and households have tightened further. The underlying picture for consumer spending appears weak. Businesses have responded to the worsening outlook by running down inventories, cutting production, scaling back investment plans and shedding labour.”

The BOE statement also said that the annual consumer inflation rate declined to 3.1 percent in December and should slide below 2.0 percent later this year. The bank said that the sharp decline of the pound sterling has increased the cost of imports but will help spur economic growth as the year goes on.

The European Central Bank, meanwhile, decided to leave its interest rate steady at 2.00 percent today in a widely forecasted move. Today’s rate hold follows recent rate reductions by the bank on January 15th by 50 basis points and on December 4th by 75 basis points. The ECB has cut 225 basis points off its interest rate since October trying to ease the effects of the eurozone economic slowdown. The eurozone officially fell into recession in the third quarter when GDP declined by 0.2 percent following the second quarter decline of 0.2 percent.

Jean-Claude Trichet, the President of the ECB, talked in his press release today about the eurozone economy as he said, “As anticipated in our interest rate decision of 15 January 2009, the latest economic data and survey information confirm that the euro area and its major trading partners are undergoing an extended period of significant economic downturn, and that accordingly both external and domestic inflationary pressures are diminishing. We continue to expect inflation rates in the euro area to be in line with price stability over the policy-relevant medium-term horizon, thereby supporting the purchasing power of euro area households.”

Despite holding the rate steady today, the ECB is expected to reduce the rate again in its March meeting although Trichet does not feel the need to follow the U.S. and Japan to almost zero as he stated in his press conference today that, “Zero interest rates at the moment I am speaking is not something that we would consider appropriate.”

Currencies Today: Euro falls and Pound advances.

The currency trading markets today saw the British pound advance in trading today against the other major currencies following the interest rate announcements while the euro has declined in trading.

The pound has advanced versus the US dollar for the third day in a row as the GBP/USD trades at the exchange rate of 1.4621 at the end of the U.S. trading session at 4:53pm EST after opening the day at 1.4445(00:00GMT). The euro has lost ground today to the pound as the EUR/GBP trades at 0.8746 after opening the day at 0.8886. The pound has gained versus the Swiss franc as the GBP/CHF has gained over 300 pips from its opening rate of 1.6763 to trading at 1.7109. The pound has also climbed against the Japanese yen today with the GBP/JPY advancing from 129.10 to trading at 133.19. Against the Canadian dollar, the pound has increased from 1.7804 to trading at 1.8001.

The euro, meanwhile, has declined against the US dollar today as the EUR/USD trades at 1.2790 after opening the day at 1.2836. The euro has declined versus the Canadian dollar as the EUR/CAD trades at 1.5769 after opening at 1.5818. The euro has also declined versus the Australian and New Zealand dollars as the EUR/AUD trades at 1.9603 from 1.9938 and the EUR/NZD trades at 2.4765 from the 2.5143 opening.

Against the Swiss franc, the euro has gained from 1.4899 to trading at 1.4968 while the euro has also advanced today versus the Japanese yen as the EUR/JPY trades at 116.60 from the 114.73 opening.

EUR/GBP Chart – The Euro falling against the British Pound in Forex Trading today after the Bank of England cut its interest rate and the European Central Bank held theirs steady.

Source: FOREXYARD

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

Economic News

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

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

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

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

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

EUR – EUR Falls Broadly on Russian Downgrade

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

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

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

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

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

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

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

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

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

Technical News

EUR/USD

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

GBP/USD

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

USD/JPY

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

USD/CHF

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

The Wild Card – Silver

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

Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

U.S. employment data was released today in the form of the ADP National Employment Report with the report showing a decrease of 522,000 nonfarm private jobs for January compared with December. Today’s employment report follows the November to December revised decline of 659,000 jobs. The decrease in January jobs, despite numbering over half a million, was better than market forecasts that were expecting a bigger decline of 535,000 jobs.

The service-providing sector showed the largest decline for the month with a loss of 279,000 jobs while the goods-producing sector fell by 243,000 jobs. The manufacturing sector registered its 28th month in a row of employment decline with a loss of 160,000 jobs while construction jobs fell for the 22nd straight month with a decline of 83,000 workers. All size of businesses slashed jobs in January as large businesses lost 92,000 jobs, medium sized businesses shed 255,000 jobs and small businesses dropped 175,000 jobs.

The widely watched US Nonfarm Payrolls report for January is to be released this Friday at 13:30 pm GMT with market forecasts predicting a decline of 535,000 jobs after December’s 524,000 decrease.

ISM Non-Manufacturing data contracts in January.

U.S. Non-Manufacturing economic data, released today by the Institute for Supply Management, showed that non-manufacturing economic activity failed to grow in January for the 4th straight month. September’s ISM Report On Business index readings for economic activity were at 42.9 percent following December’s 40.1 percent level. The January score was better than economic forecasts which were expecting the ISM index reading to register 39.1 percent but were still in contraction territory. A score above 50 is considered to be growth and less than 50 is considered to be contraction in that sector.

Almost all of the economic sectors tracked for January showed contracting index scores with the exception of supplier deliveries which stands at a 51.5 percent score. New orders, business activity, production, employment, inventories, customer inventories, prices and the backlog of orders all showed continued contracting levels for January. Notably, the exports index showed negative growth for the 3rd straight month with a 0.5 percent decline while the imports index also contracted for the 3rd month in a row despite a 8.0 percent increase in January.

U.S. Dollar mixed in Forex Trading.

The U.S. dollar has been mixed in forex trading today against the major currencies. The dollar has gained against the euro, Australian dollar, Swiss franc and New Zealand dollar while falling versus the Canadian dollar and British pound.

The euro has fallen versus the dollar as the EUR/USD has declined from today’s 1.3006 opening(00:00 GMT) to trading at approximately 1.2851 in the afternoon of the US trading session at 1:54pm EST. The British pound has declined today versus the dollar from 1.4393 dollars per pound to trading at 1.4448 dollars per pound. The dollar is trading virtually unchanged against the Japanese yen today as the USD/JPY trades at 89.59 after opening at 89.57.

The dollar has fallen slightly against the Canadian dollar after opening at 1.2316 earlier today to trading later at 1.2310. Against the Swiss franc, the USD has gained ground from the 1.1464 opening to trading at 1.1605.

The New Zealand and Australian dollars are both falling against the US dollar from their opening exchange rates. The NZD/USD currently trades at 0.5075 after opening at 0.5111 while the AUD/USD trades at 0.6460 after opening today at 0.6476.

USD/CHF Chart – The US Dollar advancing today against the Swiss Franc in Forex Trading and advancing above the 55-day moving average(red).

Source: FOREXYARD

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

Economic News

USD – Dollar Falls on Increased Risk Appetite

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

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

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

EUR – EUR Records Mixed Results Ahead of Thursday Rate Decision

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

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

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

JPY – Weaker Yen inspires Japanese Stock Market Rally

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

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

Oil – Oil Expected to Climb on Middle East Tensions

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

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

Technical News

EUR/USD

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

GBP/USD

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

USD/JPY

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

USD/CHF

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

The Wild Card – USD/CAD

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

Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.