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The US dollar reached its lowest in three weeks on Wednesday’s trading session as the single currency strengthened on the expectations of interest rate hike by European Central Bank to handle the euro zone’s sovereign debt problems.

Moreover ECB president Jean-Claude Trichet also emphasized on measures to find a solution for euro zone’s macro economic imbalances in a recent statement.

The dollar index DXY which measures the US dollar’s performance versus its six major counterpart currencies declined to 77.373 on Wednesday as compared to 77.784 on Tuesday’s North American trading session.

The Euro surged to 1.3749 yesterday against the US dollar as compared to 1.3661 on late Tuesday. The British Pound also gained versus the greenback to 1.6211 as compared to 1.6141 on Tuesday.

The minutes of monetary policy meeting from BOE which was released earlier this month showed that its major officials were in favor of increase in interest rates.  Currency strategist David Song from DailyFX commented, “There could be a growing shift within the BoE, with the committee continuing to show a greater willingness to gradually normalize monetary policy later this year, the central bank may see scope to lift the key rate … in the first half of 2011 in an effort to curb the risk for inflation.”

The US dollar also declined versus the Japanese yen to 82.46 on Wednesday as compared to 82.74 on Tuesday’s late trading session.

The New Zealand dollar further declined versus the greenback as decrease in interest rates is expected in by the New Zealand’s central bank in reaction to the recent earthquake.

The Australian dollar gained 0.4 percent against the New Zealand currency to 1.3413 in yesterday’s session while the greenback traded at 1.3408 versus the New Zealand dollar.

About the Author

Daily forex trading news written by Rehan from DailyForexTrade.com

Source: ForexYard

The US dollar slid against the euro following a rally in global equity markets. The rally prompted investors to turn to higher yielding riskier assets and away from the USD. With recent market optimism, traders may continue to see a small downward trend in the dollar as its positions are unwound in exchange for higher yielding assets.

Economic News

USD – US Dollar in Decline from Renewed Risk Appetite

The US dollar slipped against the EUR and CHF Wednesday, erasing some early morning gains after encouraging European data sent traders into riskier, higher-yielding assets. By yesterday’s close, the greenback had fallen against the EUR, pushing the oft-traded currency pair to 1.3750. The dollar experienced similar behavior against the Swiss franc, closing at the 0.9900 price level.

Existing home sales in the US rose by 5.36M last month, slightly higher than the consensus forecast of a 5.27M increase.

The economic reports from Tuesday also bolstered US Treasury yields, but weren’t enough to get active market participants to continue buying dollars. Instead, traders saw the upbeat news as a reason to search out riskier assets. American stocks and crude oil were among the biggest beneficiaries of this increased risk demand.

Looking ahead to today, the most important economic indicators scheduled to be released from the US are the Core Durable Goods Orders report at 13:30 GMT. Traders will be paying close attention to today’s announcement as a stronger than expected result may continue to boost risk appetite in the short-term.

EUR – EUR Bullish after as Regional Industries Report Growth

The euro rallied broadly against most of it major currency pairs on Wednesday as US stocks rose. The 17-nation currency extended gains against the US dollar and closed around 1.3750. The EUR experienced similar behavior against the GBP as the pair rose from 0.8420 to 0.8490 by day’s end.

The EUR was affected by a US stock market rally and a bearish dollar. Growth in stocks led investors to buy-back into the EUR, as they looked for returns on buying commodity-linked and higher-yielding currencies in Wednesday’s trading.

Turning to today, traders will want to pay particular attention to the string of data emanating from the United States, beginning with the reports on last month’s durable goods orders. Should tomorrow’s figures indicate further improvements in the US economy, the euro could maintain its current course, and may even push towards the 1.3800 resistance level against the greenback.

JPY – Yen Higher vs. Major Currency Pairs

The Japanese yen saw a relatively bullish trading session yesterday, gaining ground against most of its currency crosses. The JPY outpaced the USD and closed around 82.50. Moreover, the yen gained approximately 100 points versus the GBP, closing at 133.70 from the earlier mark of 134.65.

The JPY’s trends today will be affected by the rebounds in its primary currency pairs. It seems that the USD and EUR are expected to continue trading volatile today, especially against the Japanese currency. We could see some retracement as the day progresses.

Traders should keep a close look on the news coming from the US today as it is set to drive today’s market events. It is also advisable for traders to follow any unexpected comments coming from key Japanese governmental figures, as this is also likely to lead to further JPY volatility.

OIL – Crude Oil Holds above $98 a Barrel

Oil prices continued to sustain their recent surge in value as upbeat European and US industrial data reinforced optimism about economic and energy demand growth. So long as traders seek out higher yielding assets, commodities appear poised to gain ground.

Tensions spreading throughout the Middle East and North Africa are no doubt feeding this price rise. Crude prices climbed to $99.91 a barrel yesterday, its highest settlement since September 2008, before rebounding back to $98.97 at the day’s close. Industrial output in Europe accelerated in February helping to fuel a move by investors into commodity-link and higher-yielding currencies.

Technical News

EUR/USD

The 4-hour chart is showing mixed signals with its RSI fluctuating in neutral territory. However, there is a fresh bearish cross forming on the daily chart’s Slow Stochastic indicating a bearish correction might take place in the nearest future. Going short might be a wise choice.

GBP/USD

The pair has been range-trading for a while now, with no specific direction. The daily chart’s Stochastic (slow) is providing us with mixed signals. The 4-hour chart does not provide a clear direction either. Waiting for a clearer sign on the hourlies chart might be a good short-term strategy today.

USD/JPY

The USD/JPY continues to decline after failing to move above its 200-day moving average at 84.00. The long term downtrend appears to have resumed. As such, traders should be short on the pair with a first target at the rising trend line offo fo the November and December lows.

USD/CHF

The pair has recorded much bearish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart’s Stochastic (slow) indicates that a bullish reversal is imminent. An upward trend today is also supported by the RSI. Going long with tight stops may pay off.

The Wild Card

Oil

Crude Oil prices rose significantly in the last two days and peaked at $92.50 a barrel. However, the 4-hour chart’s RSI is floating in the over-bought territory suggesting that the recent bullish trend is losing steam and a bearish correction may be impending. This might be a good opportunity for forex traders to enter the new trend at a very early stage.

Forex Market Analysis provided by ForexYard.

© 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.

Today promises to be a heavy trading session, as significant news out of the US is set to create major market volatility. The USD has recently seen some significant losses against its main currency rivals. Whether today’s news will help the greenback recover some of its losses is still unknown. What can be said for sure is that traders will want to keep an eye on the day’s events.

Here is a roundup of today’s main economic indicators:

13:30 GMT: USD Core Durable Goods Orders
This report is a measure in the percentage change in value of purchase orders with durable goods manufacturers, excluding the transportation industry. This report acts as a leading indicator of production as it represents the latest update on manufacturing demand in the market for the past month. Should this figure come in at or above expectations, traders may take this as a sign of a strengthening US economy and buy back into the USD prior to week’s end.

13:30 GMT: USD Unemployment Claims
The weekly US unemployment claims figure is widely considered to be one of the more significant events on the forex calendar. Unemployment remains a key stumbling block to economic recovery in the US.

Analysts are predicting today’s figure to come in slightly better than last week’s. At the moment, forecasts are for around 403K. Should the unemployment number come in at or below this number, traders can expect the dollar to make some afternoon gains, possibly recouping some of its latest losses.

USDCHF continued its downward movement from 0.9774 and broke below 0.9300 (Dec 31, 2010 low) support, suggesting that the long term downtrend from 1.1730 (Jun 1, 2010 high) has resumed. Resistance is at the falling trend line on 4-hour chart, now at 0.9390, as long as the trend line resistance holds, downtrend could be expected to continue. Deeper decline could be seen in a couple of days, next target would be at 0.9200 area.

Daily Forex Forecast

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By Russell Glaser

Rising geopolitical tensions across the globe have directed safe haven flows into the Swiss franc.

The past two weeks have brought increased risk aversion to the financial markets due political unrest in the Middle East which has turned into violent clashes and all out civil war in Libya. Continued protests in Bahrain and Iran threaten stability while at the same time two Iranian naval vessels have passed through the Suez Canal, provoking regional tensions.

These events have had not only a psychological impact on the improving global economy, but have caused market players to act accordingly. Oil prices have been sent higher and equities have slumped, as have higher yielding currencies such as the Australian dollar

In a search for safe haven assets, traders have moved out of riskier, higher yielding securities. One of the main beneficiaries of these inflows has been the Swiss franc. Since February 11th, the franc has booked significant gains versus both the dollar and the euro. The turnaround in both the USD/CHF and the EUR/CHF has come at significant technical levels.

The downward movement of the USD/CHF began as the pair made a double top reversal pattern at a price of 0.9770, a price level that coincides with a 61.8% Fibonacci retracement of the December move lower. The pair is now encroaching on significant support levels. The early February low of 0.9330 and the December 31st low of 0.9300 stand out.

Looking at the EUR/CHF, the downtrend resumed as the pair failed to move above the 200-day moving average at 1.3200. Since this failure, the pair has since retraced 50% of the January to February move at 1.2800. Support in the downtrend is found at the early January high of 1.2720 with further support at the swing low on the daily chart at 1.2400.

Should the geopolitical events continue to unrest financial markets, the Swiss franc will be a significant benefactor in the search for safe haven bids.

Forex Market Analysis provided by ForexYard.

© 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.

Following the protests in the Middle East during the past month, demand for gold as an alternative investment is reaching new highs. As a result, gold climbed from $1,307 an ounce to the $1,410 level in about four weeks. Due to a mild correction, gold is now trading at $1,402 an ounce, however, what seems to be a rounding bottom pattern in the making indicates that gold might cross the $1,410 level shortly.

• The chart below is the spot gold 2-hour chart by ForexYard.
• There is a very distinct bullish channel formed on the chart, which has reached its peak a couple of days ago, at the $1,410 level.
• The Slow Stochastic continues to point up, despite its high location – above the 80-line. This clearly indicates that the bullish momentum has more steam in it.
• The MACD is on the verge of completing a bullish cross. If the bullish cross will indeed take place, this may verify the bullish notion.
• In addition, a rounding bottom pattern appears to be forming on the chart (highlighted in the blue line). This pattern means that gold is likely to climb back towards the $1,410 level.
• The pattern also indicates that gold has potential to cross the $1,410 resistance level, with potential to reach $1,420 an ounce.
• The next resistance levels are located at $1,410, $1,420 and $1,431.
• The next support levels are at: $1,394, $1387 and $1,375.

The US dollar posted slight gains on Tuesday versus its major counterpart currencies as investors got a bit optimistic about the single currency on expectations of increase in key interest rates by European Central Bank.

The dollar index DXY which measures the US dollar’s performance versus its six major rival currencies gained to 77.784 on Tuesday as compared to 77.739 on Monday’s European trading session.  The dollar index moved up to 78.326 in yesterday’s Asian trading session however later settled around 77.578.

The Euro surged to 1.3705 versus the US dollar but later on settled to 1.3661 as compared to 1.3666 on Monday. The single currency along with Swiss franc remained strong due to remarks of Mersch supporting tightened monetary policy by European Central Bank.

Swiss Franc moved mainly on the political unrest in Libya which has resulted in soaring oil prices making investors shift their focus away from the greenback.

The Pound Sterling also plunged to 1.6141 versus the US dollar on Tuesday as compared to 1.6221 on Monday.

The US dollar remained under selling pressure versus some currencies despite the latest data of US home price which declined in December as per wide expectations. The US dollar declined versus the Japanese Yen to 82.74 on Tuesday as compared to 83.18 on Monday.

The New Zealand dollar plummeted due to major earthquake which killed more than 60 persons and almost destroyed Christchurch, New Zealand second largest city. The US dollar surged 2.2 percent versus the New Zealand currency to 1.3392 on Tuesday. Australian dollar also gained 0.5 percent to 1.3365 against New Zealand dollar however declined 0.9 percent to 99.78 versus the greenback.

About the Author

Daily forex trading news written by Rehan from DailyForexTrade.com

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

An uneasy calm descended over FX markets during the Asia session, and risk currencies managed to hold their ground despite continuing concerns about Libya. The dollar fell further against the yen, but has steadied against the Swiss franc. EURUSD traded 1.3649-1.3712, USDJPY 82.53-82.89. AUDUSD crept back above parity although there seemed to be little conviction behind the move. NZDUSD continues to languish sub-0.75. The euro remains supported on expectations of a hawkish ECB press conference next week. The S&P 500 fell just over 2%, registering its worst one-day fall since August. WTI and Brent are $95.57 and $106.45, respectively, and gold is $1399.83 at the time of writing. On the US data front, both consumer confidence and the Richmond Fed manufacturing survey showed upside surprises. S&P/Case-Shiller data registered another decline in house prices. With few top-tier data releases in the US ahead, external events will remain the larger driver of risk sentiment and we should continue to see a bifurcation of dollar performance, as it benefits as a safe haven versus the higher-beta currencies but struggles against the Swiss franc and the yen as market participants remain undecided on US recovery prospects.
EUR

The euro was supported by hawkish comments from the ECB’s Mersch. While his tone was not particularly surprising, comments indicating the possibility of hiking rates with temporary liquidity measures still in place and the specific mention of the March 3 ECB meeting piqued interest. We believe the ECB will also have updated forecasts at that meeting and Mersch said the ECB may warn of “upside inflation risks” then. S&P later cautioned that Spain still has significant downside risks to its AA credit rating and could face further problems in obtaining financing in the markets. S&P also said Spain has not done enough to “radically overhaul [its] labour market.” S&P has the lowest rating on Spain among the three major ratings agencies but the euro nevertheless managed to hold on to some of its earlier gains.
German Chancellor Merkel said the EU may consider extending the period for the Greek bailout plan. She said any extension would have to be part of a larger, more comprehensive solution and that Germany would present initial proposals at the specially called March 11 EU summit.
GBP

The BoE’s Posen and Tucker were on the newswires yesterday. Posen again sounded dovish as he said it would be a mistake to raise the BoE policy rate just “for the sake” of it and he did not rule out the possibility of deflation should the BoE raise rates right now. Tucker said the recovery could take a while longer and the BoE faces a dilemma on interest rates. He said inflation is a worry and that the BoE would need to raise rates rapidly in order to get CPI down quickly.
Up next are the BoE MPC minutes from the Feb 10 meeting. The vote split will be the focus, as at least one other member is likely to have joined Andrew Sentance and Martin Weale in voting for a rate hike. But even if there is no shift in the voting stance, the commentary will likely suggest that many members were close to voting to raise interest rates. While a third hawkish voter would not tip the scales overwhelmingly in favour of an imminent policy rate hike, continued hawkish overtones should keep sterling supported in the near term, especially as BoE hiking expectations remain elevated.
AUD

RBA Governor Stevens repeated that AUD strength should help contain inflation. He added that, although he is uncertain how long the boom in the terms of trade will last, it does seem persistent.
NZD

Prime Minister Key has declared a national state of emergency following yesterday’s earthquake in Christchurch.
Finance Minister English said the RBNZ may consider the impact of yesterday’s earthquake in its rate decisions. RBNZ Governor Bollard issued a statement on the disaster but made no mention of monetary policy.
Moody’s said the quake would have no immediate impact on New Zealand’s Aaa rating, but warned that the country is at risk of moving back into recession.

TECHNICAL OUTLOOK
EURJPY 114.94 resistance.
EURUSD BULLISH The pair targets 1.3744, break here would expose 1.3826. On the downside, initial support is at 1.3525 intraday low ahead of 1.3463.
USDJPY BULLISH As long as 82.34 continue to cap the downside risks, expect recovery towards 83.98.
GBPUSD BULLISH Stalled in front of 1.6279/99 resistance zone. Support is defined at 1.6076.
USDCHF BEARISH Focus is on 0.9329/01 support area. Initial resistance at 0.9539.
AUDUSD BULLISH Initial resistance lies at 1.0158 ahead of 1.0200 while near-term support is defined at 0.9944.
USDCAD BEARISH Initial support is at 0.9816 ahead of 0.9745/12 area.
EURCHF NEUTRAL 1.3029 and 1.2774 mark the near term bull and bear triggers respectively.
EURGBP BEARISH Break of 0.8356 would open way towards 0.8332/13 support zone. Resistance is at 0.8514.
EURJPY BULLISH Support at 112.09 holds, while a break above 114.94 would expose 115.42/68 zone.

Forex Daily Market Commentary provided by GCI Financial Ltd.

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By Anton Eljwizat

A bearish movement of the USD/CHF cross hasn’t received much support as of late. Below, I will demonstrate that the USD/CHF pair has already commenced an upward trend for today, as a bullish cross has taken place on the Slow Stochastic and MACD. In addition, the Williams Percent Range indicates that the price of this cross currently floats in the oversold territory, signaling up pressure. Traders are strongly advised to take advantage of the trend at an early stage. Therefore, why not open long positions at an excellent price?

The next resistance level is located at the 0.9430 level.

Forex Market Analysis provided by ForexYard.

© 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.