Author: FX_Trdr

Source: ForexYard

The EUR advanced on the U.S dollar Wednesday, but failed to reach the $1.50 mark as investors zeroed in on a Fed official’s comment suggesting key interest rates could remain low until 2012. Federal Reserve officials were quoted saying that the Fed could keep short-term fed funds rates at near-zero until early 2012. The ultra-low rates weigh on the U.S dollar, as investors use the buck to fund investments in higher-yielding assets.

Economic News

USD – Dollar Retreats after 3 Week’s Rally

The U.S dollar advanced against the EUR Thursday on speculation U.S. investors are bringing back overseas funds toward year-end and traders cut bets the greenback will weaken. The U.S. currency also gained on speculation traders trimmed short positions after it failed to weaken beyond $1.50 per euro, according to analysts.

The Dollar rose to $1.4938 per EUR from $1.4963 yesterday. The greenback also climbed to $1.6714 per Pound from $1.6749.However the U.S. currency may weaken before a government report today forecast to show manufacturing in the Philadelphia region expanded for a 4th month, boosting demand for higher-yielding assets. The USD is unlikely to advance against the EUR until the Fed signals that it’s prepared to increase Interest Rates.

The Federal Reserve Bank of Philadelphia will report today that its economic index rose to 12.2 this month from 11.5 in October, according to economists. A positive reading signals expansion, and may support the Dollar further.

EUR – The EUR Pairs Gains after U.S Weak Data

The EUR pared some gains against the U.S dollar on Wednesday after data showed tame underlying U.S. inflation and a decline in housing starts last month, suggesting a U.S. recovery will be a slow one.

Slow economic growth in the U.S could stall a global recovery, and that can prompt investors to pare risky trades in higher-yielding currencies and assets. The European currency dipped briefly to $1.4839 from about $1.4850, though it remained 0.5% firmer on the day on the view that U.S. Interest Rates will remain low into 2010.

The British pound depreciated for the first time in 5 days against the EUR, weakening 1% to 89.38 pence. The Pound also dropped vs. the U.S dollar 0.4% to $1.6744 today.
The Sterling fell for a 3rd day versus the U.S dollar after the Daily Telegraph said U.K. lenders are in a worse state than those elsewhere, citing the world’s largest credit-checking company.

JPY – Yen Advances on Investors’ Demand for Safety

The Japanese yen rose against all 16 of its major counterparts as signs that Japan’s largest banks are facing pressure to raise funds spurred investors to bring back earnings on assets abroad. Japan’s currency strengthened as Asian stocks slipped.

The JPY strengthened against the EUR on speculation European banks will disclose more credit losses, boosting demand for the relative safety of the Japanese. The Yen climbed to 133.10 per EUR from 133.64 yesterday. It advanced to 148.90 per Pound from 149.58, after earlier rising to 148.78, the highest level since Nov. 12.

Crude Oil – Oil Rallies for a 3rd Day on Weak Dollar

Crude Oil prices rose for a third consecutive session, as government data showed a surprise drop in U.S. crude inventories and as the U.S. dollar turned lower, lifting dollar-denominated commodities prices.

Crude inventories fell modestly last week as imports declined and demand ticked up, the Energy Information Administration’s (EIA) petroleum data showed Wednesday. The weekly EIA data also showed U.S. crude imports fell 0.9% to 8.58 million barrels a day, and total petroleum demand rose 1% to 18.5 million barrels a day. While demand was higher than a week ago, it’s still down by more than 2% from a year ago.

Also supporting Oil prices, the U.S dollar weakened after a report showed new U.S. home construction slowed much more than forecast last month, while consumer prices rose more than expected. Crude oil prices are denominated in U.S. dollars, so a weaker dollar makes the commodity less expensive for investors holding other currencies. In addition, commodities have benefited from a dollar carry trade, whereby investors borrow cheap dollars to invest in hard assets.

Technical News

EUR/USD

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

GBP/USD

There is a fresh bullish cross forming on the 4-hour chart’s Slow Stochastic indicating a bullish correction might take place in the nearest future. The upward direction on the hourly chart’s Momentum oscillator also supports this notion. Going long with tight stops might be the right strategy today.

USD/JPY

The typical range trading on the hourly chart continues. The 4-hour chart’s RSI is floating in neutral territory. However, the weekly Chart’s RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. Going long with tight stops may turn out to be the right choice today.

USD/CHF

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

The Wild Card – Gold

Gold prices rose significantly in the last month and peaked at $1141.25 for an ounce. However, the daily chart’s RSI is floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.

Forex 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.

Europe

Europe’s current account came out worse than expected at -5.4b

England’s MPC minutes showed uncertainty going forward

England’s CBI industrial Trends Orders improved but came out at negative 45

To catch up on the UK challenge go to:
http://www.etoro.net/forex-news/uk-challenge-first-update-7595.html

Asia

Japan’s machine tool orders dropped by less than expected at -42.5

Americas

Housing Starts increased by less than expected (0.53m)

Building Permits climbed by just under expectations at 0.55m

CPI increased by 0.3%

Forex + Commodities

It was the commodity market that took center stage yesterday as the Dollar dropped due to disappointing economic data from the U.S. Already during Asian hours the Dollar had lost its ground against counterparts, allowing Gold and Silver to climb to new levels. Gold the current leading commodity hit a new high for 2009, closing the session just under $1150. Silver, a commodity that has recently been lagging, soared higher throughout the session, but lost its steam as it ran into trend line resistance.

From a technical point of view, silver is now at the top of its trend line within its major uptrend. Even though indicators are still showing relative strength, current levels could act as resistance, especially if the broader market fails to continue higher.

Economic data helped to spark buying on the commodity market yesterday, as inflation numbers from the U.S showed that despite the slow recovery, prices are starting to increase. One must note that even though higher prices are often thought of as a good thing, especially when they rise due to healthy consumer consumption, rising prices along with low consumer consumption can often result in market fear, sending investors into safe-haven assets such as Gold, to hedge against inflation.

Consumer prices rose 0.3% in October with prices excluding food and energy rising 0.2%. In addition, the housing market continued to disappoint, releasing weaker than expected housing start and building permits. The numbers came out at 0.53M and 0.55M, respectively.

On the different currency pairs, Dollar counterparts managed to gain ground throughout the session, but failed to present any major moves. The GBP/USD presented an interesting session as the BOE released its minutes, showing that even though the members voted to leave rates at a low of 0.5%, not all the MPC members were in sync regarding future monetary actions. The minutes showed that policy makers are still debating whether the U.K’s economy will require further stimulus or not. Following the release, the markets took the news more than lightly and presented extreme volatility. The GBP/USD bounced back and forth by over 60 pips, before settling down to close with a minor loss.

The EUR/USD finished the session with a mild gain, while the Australian Dollar finished the session unchanged.

Equities

On the Stock market the major indices finished the session with an average loss of 0.2%. The Nasdaq dropped the most out of the three major indices and closed down by -0.48%. Technology companies slid throughout the session after profit forecasts at Auto desk and Salesforce.com came out worse than analysts were expecting. Even though the sector weighed on the market throughout the session, financials helped to cushion the fall, providing support towards the second half of the trading day.

From a technical point of view the S&P500 is still trading within its uptrend but finished the session with a doji candlestick – one that normally indicates uncertainty in the markets.

Market Data Ahead

Looking forward, England will start the morning off with a bang, releasing its Retail sales result. The numbers are expected to show an increase and come out at 0.6%. Throughout the session the U.S will take the stage and release its initial Jobless claims and Philadelphia Fed manufacturing Index. Even though the jobless situation isn’t expected to change, the manufacturing sector is expected to show an improving situation and come out with a 12.5 figure, compared to an expected 11.5

Daily Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

By CountingPips.com

U.S. housing starts and building permits decreased unexpectedly in the month of October while housing completions increased according to data released by the Commerce Department on new residential construction. Housing Starts fell by 10.6 percent in October to a seasonally adjusted annual rate of 529,000 starts following an annual rate of 592,000 in September.  October’s data was worse than economic forecasts predicting a rise for the month to a 600,000 starts pace.

Building permits statistics, used as a predictor of future construction, showed a seasonally adjusted annual rate of 552,000 permits in October which is a decline of 4.0 percent when compared to September. Building permits also failed to match forecasts expecting permits to number approximately 580,000 annually.

Housing Completions for October increased when compared to September as completions rose to an annual rate of 740,000 privately-owned housing completions. This is an increase of 1.9 percent from September’s completion totals.

US Consumer Prices increase in October

U.S. Consumer Prices increased for the third month in a row as energy price increases helped push the index higher according to a report released today by the U.S. Department of Labor. The Consumer Price Index, a key measurement of inflation, increased by 0.3 percent in October following up an increase of 0.2 percent in September.

The annual rate of consumer prices, despite the monthly gain, fell by 0.2 percent when compared to October 2008. The annual rate of inflation in September had registered 1.3 percent decline. Rising energy prices were a significant contributor in the increased inflation as the report showed that energy prices rose by 1.5 percent and gasoline prices increased by 1.6 percent for the month. Food prices rose by just 0.1 percent in October.

The core inflation reading, excluding food and energy prices, increased by 0.2 percent for the month surpassing market forecasts expecting a 0.1 percent gain. The annual rate of core inflation increased by 1.7 percent for June following up an increase of 1.5 percent in September.

US Dollar mixed in Forex Trading

The U.S. dollar has been mixed in forex trading today against the other major currencies. The dollar has been gaining today versus the British pound, Canadian dollar, Japanese yen and Australian dollar while falling against the euro and Swiss franc and trading almost unchanged versus the New Zealand dollar at 4:04 pm EST according to currency data by Oanda.

The US stock markets have had a negative session so far today with the Dow Jones falling by roughly 11 points, the Nasdaq decreasing 10.64 points and the S&P 500 showing a 0.53 point slide.  Oil has traded higher by approximately $0.46 to $79.60 while gold has risen by $2.40 to $1141.20 per ounce.

Crude oil rose above$80 a barrel on Wednesday as the dollar weakened, prompting investors to once again buy into commodities. However, as I will demonstrate below, Crude Oil may very well be heading for a reversal later today. This might be a good opportunity for forex traders to enter the trend at a very early stage and a great entry price.

• The indicators used are the Slow Stochastic, RSI and MACD.

• Point 1: There is a “doji” candlestick that has formed on the chart, indicating that a reversal should take place.

• Point 2: The Slow Stochastic indicates a bearish cross, signaling that the next move may be in a downward direction.

• Point 3: The Relative Strength Index (RSI) indicates that the price of this cross currently floats in the overbought territory, signaling downward pressure.

• Point 4: The MACD indicates an impending bearish cross, which may signal a downward movement is going to occur in the near future.

Crude Oil 4-Hour Chart

By Fast Brokers – The USD/JPY is continuing its consolidation between our 1st and 2nd tier uptrend lines as the S&P futures hover just above their psychological 1100 level.  Not much has changed since yesterday despite another wave of negatively mixed U.S. econ data.  The story remains the S&P’s resilience above 1100 despite econ data indicating a slowdown in the pace of America’s economic recovery.  If the S&P can manage to move higher regardless of disappointing data, then another wave of broad based Dollar weakness may kick-in, thereby weakening the USD/JPY.

Meanwhile, investors shouldn’t forget that Japan’s Prelim GDP topped expectations by 5 basis points to kick off the week.  Therefore, one may expect investors to send the USD/JPY lower due to a more favorable outlook for the Yen as compared to the Dollar.  However, the USD/JPY is continuing to hold strong above our 1st tier uptrend line since the currency pair is drifting closer to a key retracement towards October lows.  Regardless of the USD/JPY’s present resilience, there is still a long-term downtrend at play and our technical cushions are wearing thin.

Technically speaking, the USD/JPY is presently fighting to stay above our 1st and 2nd tier uptrend lines.  Should our 1st tier give way, the currency pair still has 10/2 lows along with October lows serving as technical cushions.  As for the topside, the USD/JPY faces multiple downtrend lines along with the highly psychological 90 level.  Therefore, quite a few topside challenges are in place.  Meanwhile, investors should continue to monitor the S&P’s interaction with 1100 as well as the reaction of equities to tomorrow’s weekly Unemployment Claims release.

Present Price: 89.18

Resistances: 89.31, 89.41, 89.54, 89.68, 89.83, 89.89, 90.07

Supports:  89.15, 88.99, 88.85, 88.73, 88.58, 88.44

Psychological: 90, November and October Lows

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The Cable is consolidating after briefly trading beyond November highs on Monday.  Investors are presently digesting the BoE Meeting Minutes released earlier today.  The minutes revealed that although seven members of the BoE voted for the 25 billion Pound QE injection, one member vote for non-action and the other for a larger 40 billion Pound injection.  Therefore, divisions of opinion may exist in the BoE in regards to present and future monetary policy actions, thereby increasing investor uncertainty a bit.  However, if pricing data points, such as Tuesday’s CPI and RPI, continue to rise while unemployment falls the BoE may choose a less dovish monetary policy stance in the future, thereby strengthening the Pound relative to the Dollar over the medium-term.  U.S. data has been underperforming as of late and the Fed’s loose monetary stance could be in place for quite some time.  As for the time being, the Cable has had trouble breaking 11/09 highs and our 4th tier downtrend line.  Meanwhile, the EUR/USD remains locked beneath its highly psychological 1.50 level.  Therefore, the Cable has yet to receive the positive boost it needs to approach its own highly psychological 1.70 level.

Technically speaking, investors should continue to monitor the Cable’s interaction with our 4th tier downtrend line since it runs through 11/09 highs.  The GBP/USD faces light near-term historical resistance between present price and the psychological 1.70 level.  In fact, we had to trace back to 2003 levels to find more substantial resistances.  Hence, the Cable could be in for more extensive topside movements should fundamentals and U.S. equities cooperate.  Speaking of which, investors received another wave of negatively mixed U.S. econ data and the S&P futures are having trouble creating some topside separation from their highly psychological 1.70 level.  As a result, the economic fundamentals are not helping out the Cable’s uptrend for the time being.  However, Britain will release Retail Sales tomorrow along with Public Sector Net Borrowing.  A positive Retail Sales number could help the uptrend’s cause.  Meanwhile, the Cable is continuing a consolidative pattern while slowly drifting back below 11/09 highs, meaning there’s a potential for downward forces to kick in.  As for the downside, the Cable still has multiple uptrend lines serving as technical cushions along with 11/16 and 11/12 lows.  Furthermore, the psychological 1.65 level could work in the Cable’s favor should conditions deteriorate.

Present Price: 1.6795

Resistances: 1.6808, 1.6828, 1.6849, 1.6875, 1.6896, 1.6913, 1.6935

Supports: 1.6778, 1.6753, 1.6730, 1.6694, 1.6664, 1.6615, 1.6594

Psychological: 1.70, 1.65 November and August Highs, November Lows

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The EUR/USD managed to bottom out at our 3rd tier uptrend line yesterday despite a pop in sell-side activity in reaction to more negative U.S. economic data.  The EUR/USD continues to trade primarily off of its last important data releases, Friday’s disappointing GDP data points.  However, the EUR/USD is strengthening again today in the face of a surprisingly negative EU Current Account release, indicating an increase in import demand.  Additionally, the U.S. released a set of negative housing numbers combined with slightly positive CPI data.  Regardless of the continuation of negatively mixed data, the Dollar continues to indicate a preference for its downtrend.  We should note that both the EUR/USD and AUD/USD have been strongly correlated with gold this year, yet haven’t participated in the precious metal’s most recent rally past $1100/oz.  Therefore, the EUR/USD may be gaining correlative support from gold, countering the impact from more disappointing EU economic data.  Lastly, the wave of negative U.S. econ data further supports the anticipation that the Fed will maintain a loose monetary policy for the foreseeable future, thereby weighing on the value of the Dollar.  The EU data wire will be relatively quiet until Friday’s German PPI release, meaning the currency pairs immediate-term performance may rest on the performance of U.S. equities and their reaction to tomorrow’s weekly Unemployment Claims release.

Technically speaking, the EUR/USD still faces multiple downtrend lines along with the highly psychological 1.50 level and previous November highs.  However, and a breach beyond our 3rd tire downtrend line could result in a retest of November and October highs with the possibility of more accelerated immediate-term gains.  Unfortunately for bulls, the EUR/USD was negated by our 3rd tier downtrend line and 1.50 on Monday, telling us the 1.50 zone continues to have a psychological impact on the currency pair.  As for the downside, the EUR/USD has built up a solid support system considering the rally since November lows.  Therefore, the EUR/USD has multiple uptrend lines serving as technical cushions along with 11/12 and 10/27 lows.  Meanwhile, investors should keep an eye on the S&P’s interaction with its psychological 1100 level because a topside breakout in the S&P could bring the EUR/USD along for the ride due to their positive correlation.

Present Price: 1.4927

Resistances: 1.4942, 1.4952, 1.4967, 1.4992, 1.5018, 1.5036, 1.5049

Supports: 1.4919, 1.4905, 1.4883, 1.4856, 1.4825, 1.4813

Psychological: 1.50, November Highs and Lows

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – Gold is continuing its incessant rise higher despite very limited participation from the Dollar.  The EUR/USD and AUD/USD are both fluctuating between their respective uptrend and downtrend lines while the S&P futures hover around their highly psychological 1100 level.  Gold has ignored its usual positive correlations since breaking through its psychological $1100/oz level and seems to have a mind of its own.  Gold’s aggressive bull movements without a sizable depreciation of the Dollar is a bit puzzling.  Therefore, investors should question if/and when gold’s correlations will lock back into place.

Meanwhile, U.S. equities have held up well considering the continual wave of negatively mixed econ data.  Despite today’s slightly positive CPI numbers, both Building Permits and Housing Starts registered disconcerting declines.  Therefore, America’s recent fundamentals are indicating a cool down in the nation’s economic recovery.  Hence, the S&P’s resilience above its highly psychological 1100 level has been impressive.  However, it feels like something’s got to give and investors will eventually need to favor one direction or another in U.S. equities and the Dollar.  Investors should closely monitor the EUR/USD, GBP/USD, and AUD/USD for a directional statement since gold has been more closely correlated to the Dollar than equities so far this year.

Technically speaking, we’re still unable to install a downtrend line on our chart due to a lack of historical perspective.  Therefore, it’s difficult to find any topside technical barriers besides gold’s potentially psychological $1150/oz level.  As for the downside, gold has multiple uptrend lines serving as technical cushions along with 11/17 and 11/16 lows along with the psychological $1100/oz level.

Present Price: $1147.70/oz

Resistances: $1150.09oz, $1152.65/oz

Supports: $1143.05/oz, $1137.60/oz, $1134.71/oz, $1130.54/oz, $1127.24/oz, $1124.27/oz

Psychological: $1150/oz, $1100/oz

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Yan Peters – The GBP/CHF pair provides strong signals for a possible change of trends. The pair is reaching towards a support level at the moment. If the level is breached, the downward move is likely to extend.

• The chart below is the GBP/CHF 4-hour chart by ForexYard.
• The technical indicators used are the Bollinger Bands, the Slow Stochastic, the MACD/OsMA and the Relative Strength Index (RSI).
• The chart provides a very distinct bullish channel. However, the chart is touching its lowest border.
• A bearish cross on the Slow Stochastic has successfully predicted the modest bearish correction that we’re currently experiencing, which led the pair to the 1.6974 level.
• Currently, both the MACD and the RSI are on the verge of indicating a bearish reversal. If the MACD will indeed perform a bearish cross, and the RSI will drop below the 70 line (both marked in red), it will be a string sign for a significant drop.
• There are 3 consecutive support levels that can be observed at the moment. The support levels are placed at the 1.6950, 1.6800 and the 1.6650 prices. If a certain level will be breached, the pair is likely to reach towards the next support level.

Forex 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

Comments by Fed Chairman Ben Bernanke surprised many investors as he joined the rallying cry for a stronger Dollar, which may lead to strength for the USD in the days ahead. On the other hand, the USD still faces downward pressure from sudden spikes in risk appetite following positive news reports as its safe-haven status has not yet diminished. After last week’s drop in consumer confidence, safe-havens like the USD and JPY have begun to regain some of their strength.

Economic News

USD – Bernanke Statements Diminish USD in Short-Term; Strength Ahead?

Following the USD’s minor slide in yesterday’s trading, it appears the greenback has started to regain some of its previously lost ground, but the market is still shaky. The Dollar spent most of yesterday’s trading gaining ground on the EUR and JPY, hitting levels of 1.4807 and 89.52 respectively. By the end of the trading session however, the USD had reversed course and started losing against its primary rivals.

Comments by Fed Chairman Ben Bernanke surprised many investors as he joined the rallying cry for a stronger Dollar, which may lead to strength for the USD in the days ahead. On the other hand, the USD still faces downward pressure from sudden spikes in risk appetite following positive news reports as its safe-haven status has not yet diminished.

As the US prepares to enter its holiday shopping season, retail sales will become a major factor in currency valuation through the last half of November and the entirety of December. Traders should take note of these reports in the weeks ahead as they will drive the market during this time of year.

Looking at today, forex traders have two primary reports from the United States which will be released simultaneously at 13:30 GMT. The first is Building Permits which will reveal the status of a portion of America’s housing sector. The second is the monthly CPI data, which highlights the level of inflation among consumer prices over the previous month. Today may be a volatile trading day due to these reports as well as the release of Britain’s monetary policy statement a few hours earlier.

EUR – EUR Bearish following Consumer Confidence Drop

The 16-nation European currency appeared to be on the downside in recent trading after statements from a number of central bankers called for a strengthening of the US Dollar. Interest rates do not appear to be getting raised by many banks in the nearest future, and this news has helped keep downward pressure on the European currencies while bankers strive to boost economic growth.

The EUR weakened as far as 1.4807 against the greenback, while also dropping below 132.50 against the Yen. This latest weakness may simply be highlighting the return of risk aversion in the market following last week’s drop in consumer confidence and major trade balances.

Britain’s Monetary Policy Committee (MPC) is due to release the Minutes from their recent policy meetings later this morning. Results are expected to show little change from Mervyn King’s statements a week ago regarding steady interest rates and the option for further bond purchases remaining open. Britain’s central bankers have hinted that their economy is not growing as they would like, and measures are being left on the table to combat any additional weakness.

As for other reports today, European Central Bank (ECB) president Jean-Claude Trichet is set to speak at a relatively less significant meeting on insurance and occupational pensions in Frankfurt. While it should not be a volatility-creating event, the possibility remains open for some movement following his statements.

JPY – JPY Gaining from Rising Risk Aversion

With a surge in risk aversion, the JPY appeared to be a growing favorite in recent trading. Climbing as high as 132.44 against the EUR and 82.47 against the AUD following trade liquidation, the Yen may be poised for further strength against these currencies without any significant news to correct this recent behavior.

After last week’s drop in consumer confidence, safe-havens like the USD and JPY have begun to regain some strength. With the holiday season in Europe and the United States approaching, the possibility remains that this strength may drop as investors pull money out of safe-havens to purchase holiday gifts, but this movement may not reflect true market conditions, only short-term cosmetic changes.

Crude Oil – Oil Prices Defy Strengthening USD, Breach $80

The price of Crude Oil climbed back above $80 a barrel in today’s early trading hours despite the sudden rise in USD strength. Speculators view the sudden increase in risk aversion to be a signal that commodity prices will continue rising as a hedge against inflation. Gold prices are still climbing, and even Silver has broken through its significant psychological price level of $18 per ounce.

With commodity prices climbing, Crude Oil appears set to maintain its current price level, with the option to go even higher as the northern hemisphere prepares for the winter months ahead. Supply remains in doubt and demand still appears weak, but speculators continue to assume that oil prices are going to rise which suggests optimism for further industry growth going into 2010. Investors will have to wait and find out if these speculators were right in their assessment.

Technical News

EUR/USD

The hourly chart displays the Relative Strength Index trading in the over bought zone, potentially signaling a downward price movement. The chart’s Bollinger Bands are also tightening, indicating the potential for an imminent breach of the bands. Traders may want to be short on this pair.

GBP/USD

The Cable’s hourly chart shows a move that began from the pair’s lower Bollinger Band and has the potential to climb to its upper Bollinger Band. A limit order to take profit may be preferred at the pair’s upper Bollinger Band price level of 1.6835. This price level may also be preferred to enter the market with an entry limit sell at the same price.

USD/JPY

The USD/JPY 4-hour chart and hourly chart shows a tightening of the pair’s Bollinger Bands, indicating the potential for an imminent breach. The hourly also shows a short term trend that began at the pair’s upper Bollinger Band, crossing the 20 day average line. This run could have the potential to reach the pair’s lower Bollinger Band. Traders may be inclined to take a limit order at 89.08 or enter long at the same price level.

USD/CHF

Yesterday the pair showed bullish strength, touching a significant resistance level of 1.2007 and then reversed course. The hourly chart displays a tightening of the pair’s Bollinger Bands, indicating the potential for an imminent breach. The chart also shows the pair’s Relative Strength Index floating in the oversold zone. This may show the pair could be in for another upward price move. Traders may want to be long on this pair today.

The Wild Card – Gold

Gold touched a new high yesterday of 1143.15, though the charts are showing bearish trends today. The daily chart displays a bearish cross has formed on the commodity’s Slow Stochastic Oscillator, indicating for a potential downward price movement. Further evidence of a potential downward correction could be supported by the pair’s Relative Strength Indicator trading in the overbought zone. This could give commodity and forex traders a reason to go short on gold today.

Forex 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.