InvestMacro FX

By CountingPips.com

Today, we are pleased to bring you our latest forex interview with forex trader and technical trading strategist Joel Kruger. Joel covers the European and Asian markets for DailyFx.com using a blend of fundamental and technical analysis and has over 10 years of experience in the forex markets as well as a background in law. Joel was also recently featured as a guest commentator on ForexTV.

Q: How did you become involved in the forex world? Was there something particularly attractive to you about the forex market?

A: After graduating from Law School, I accepted a position to work in investment banking. It was there that I had my first exposure to the trading floor and foreign exchange desk. The idea of working in a fast paced trading floor environment was something that was very exciting for me and I was particularly attracted to the FX market due to the overwhelming size and volumes traded on a daily basis. This was after all the biggest market in the world. I was also very attracted to the macro aspect of FX and the exposure that would be gained to markets and economies all over the world.

Q: How did you get your “forex” education? Did you learn by demo trading, did you have a mentor? etc.

A: Interestingly enough, while my background was completely fundamental when I entered the foreign exchange markets, I quickly gained fascination with technical analysis and began to learn and read as much as possible on the topic. I was indeed very fortunate to have a wonderful mentor who was young, exciting and brilliant, and also instrumental in helping to accelerate my career. I am a big believer in learning through actual experience so most of my learning was through reading real-time market reports and financial newspapers rather than academic materials. I also took on some trading so that I could better understand and feel the market.

Q: How often do you trade, are you a full-time trader? Do you trade longer or shorter times?

A: At present, while I do trade, I spend most of my time focused on strategy and producing the best possible trading opportunities for our clients. I am very serious about the trades that I recommend to clients and am very committed to providing real trading opportunities with clearly defined risk parameters. I also believe in transparency and even though I work as a strategist, I make it a point to publish my trading results to our clients on a daily basis so that they can track performance and gain confidence in my methodologies. As far as time frames are concerned, I would definitely classify my strategy as shorter-term. I look to take a trade every day.

Q: Do you have any preference on the currency pairs you trade?

A: Ultimately, I have no preference over which currencies I trade and will simply look for setups that are attractive. However, I do look at everything and am a big fan of trading the non-major currencies. More often than not, a setup in a major currency might not play out as well because so many market participants see the setup and inevitably this also brings too much attention to the setup which prevents it from playing out exactly the way it should. However, when trading through the minor currencies, crosses, or exotics, a setup will not get as much attention and therefore (in my opinion) have a greater chance of playing out the way it should.

Q: Do you use more technical analysis or fundamental analysis, both? Do you take sentiment analysis into your decision making?

A: I like to think of myself as a techno-fundamental analyst. I believe that technical analysis is the blueprint for the market and is the purest form of fundamental analysis. What I mean by this is that everything is discounted into the price and therefore any opinions or sentiments will be reflected in the charts. The charts should then provide an objective and clear indication of precisely which fundamental opinion is more relevant at a given time. As far as my methodology is concerned, I will look for trade setups purely on a technical basis and then help to better understand my technical view by assigning a fundamental reasoning or potential fundamental catalyst for the trade. A successful trader will often define his/her success by trading away from the herd and formulating his/her own opinions and strategies. As such, my strategies and methodologies are based on and gauged on just how far away I am from market sentiment. More often than not, the further away I am from where the sentiment is, the more successful my results.

Q: Do you have any favorite economic indicators or favorite technical indicators that you feel are most reliable?

A: I consider myself to be a classical technical analyst and my favorite indicators are some of the more simple and obvious ones. For my methodology, my favorite indicators are the Relative Strength Index (RSI) and Average True Range (ATR). Both are quite different and extremely helpful for my trading and strategy. I am a contrarian which means I will always be looking to fade overdone moves. If a market is rallying, then I will be looking to sell and if a market is dropping I will be looking to buy. As such, the RSI becomes very useful as the indicator lets you know when a market is overbought or oversold. ATR is probably my favorite indicator as it lets you know what the average range of a given currency pair (security) for the time frame you are analyzing. If you are looking at a daily chart, the ATR will then tell you the average range a day for that market. This is an amazing tool to have in your bag as it will often let you project where the market might stall out to the topside or downside on a given day.

Q: In conclusion, do you have any advice to anyone starting out in forex trading? Is there anything in particular that you wish you had learned when you started out?

A: I think the most important thing is to remember that trading isn’t about getting rich quick. If you are serious about trading then you need to understand that it is a process just like anything else. My recommendation to someone starting out would therefore be to take just 1 year and trade on no leverage. This means that you should not focus on dollars and cents but rather on percentage returns. If you can take a $1,000 account and turn it into $1100 (ie looking to make a few dollars per trade throughout the year) at the end of the year through steady trading, then you will be a huge success and give yourself all of the confidence to make a more serious commitment in your second year of trading. In order to be successful you need to have a clear head. It is so important that when you trade you are able to put your head down on the pillow every night and sleep without worrying about any given position. If you find yourself unable to sleep, then you are too leveraged and will most probably not be successful over time. In the end, take it slow and make sure you can sleep at night.

Thank you Joel for taking the time to share your views and experiences in our latest forex interview. To read Joel’s latest currency analysis and trading strategies please visit DailyFx.com.

By Sara Nunnally, Editor, Smart Investing Daily, taipanpublishinggroup.com

A couple of weeks ago, I gave you some key support points for the price of gold. I said that we’d see some pretty big swings between the $1,350 and $1,400 level. Indeed, gold prices have seesawed drastically.

View larger chart

I also said that if the price of gold fell below $1,350 that the next major support point would be at $1,250.

Of course, we’ll see some minor support here and there, like $1,330 on the chart above. That’s where gold futures bottomed out in November 2010.

Will the price of gold fall all the way to $1,250?

The honest answer is I don’t know. Here’s what’s happening now, though. January futures are set to expire on Thursday this week. At the same time, the value of the U.S. dollar has climbed. The U.S. dollar index jumped on Friday, and the euro fell against the dollar.

Those two things may have put a lot of downward pressure on the price of gold, forcing it through its previous support point.

Additionally, with the stock market continuing to rally in January, the price correction we called across the board for commodities still continues. Institutional investors took gains and are now looking to riskier assets.

That said, the appetite for gold may now be moving overseas, and that could increase demand, particularly as gold looks “cheap” compared to the end of 2011.

Interest in gold ETFs is picking up in places like China and India; some predict a boost of 40% in investment this year.

Kitco.com says gold could find support between $1,325 and $1,275, which means we could have some more downside, despite the long-term bullish outlook for gold demand.

I agree with this position, particularly if we get some good economic news this week. We’ve got American Express (AXP:NYSE) and McDonald’s (MCD:NYSE) reporting today, housing data and the State of the Union address tomorrow, FOMC decision on interest rates on Wednesday, Microsoft (MSFT:NASDAQ) earnings on Thursday, and the GDP report on Friday.

A big week to say the least.

Gold started edging higher in Asian trading late Sunday, most likely due to the steep drop in prices since the beginning of the year.

In fact, the SPDR Gold Shares ETF (GLD:NYSE) increased its holdings by 1.6%, its first rise in two weeks.

Gold mining companies will appreciate this news as the downward pressure in gold prices has also negatively affected their share prices. Take a look at Goldcorp (GG:NYSE), one of my favorite gold mining companies because of low production costs and timely acquisitions.

View larger chart

(Investing doesn’t have to be complicated. Sign up for Smart Investing Daily and let me and my fellow editor Jared Levy simplify the stock market for you with our easy-to-understand investment articles.)

It appears that the downward pressure has even forced GG out of its yearlong uptrend. GG could fall as far as $36 a share, and possibly as low as $34, should weakness in gold prices continue past this week.

At that point, though, I would consider both gold and GG oversold.

Money has been flowing out of GG like rats off a burning ship. The last time money flow was this low was back in February 2010… and GG rallied from $33.22 to $46.22 by mid-May.

At the same time, though, gold prices climbed from around $1,070 to nearly $1,250.

I don’t think we’ll see another 25% jump in gold prices over the next five months, but I expect weakness to end soon, and traditional first-quarter demand to help boost prices higher.

We’re going to keep an eye on both gold and GG this week, and I’ll come back to both of these charts in Thursday’s Smart Investing Daily article.

*Editor’s Note: In Saturday’s Smart Investing Daily weekly review, I noted that iPath Dow Jones UBS Grains ETN (JJG:NYSE) and the PowerShares DB Agriculture ETF (DBA:NYSE), the two agricultural funds we’ve been discussing, appeared to be moving higher, and that I was going to enter them both into our model portfolio to follow using today’s opening prices. Those are $54.99 and $33.62 respectively.

If you missed my interview with Marc Pearlman on Your Money Matters Radio show you can listen to it right here. In it, I discuss my new book, Barbarians of Wealth and how you can protect yourself against today’s greedy, self-serving barbarians in Washington and on Wall Street.

P.S. Gold went up 76%… but this made 975%… In every gold bull market of the past century, this investment class has outperformed physical gold. Over the past two years, one member of this class made 12 times more than physical gold. Learn all about this gold investment.

About the Author

Sara is Co-Editor of Smart Investing Daily. As Senior Research Director and global correspondent, Sara Nunnally’s diverse resume includes studies in art history, computer science and financial research. She has appeared on news media such as Forbes on Fox, Fox News Live, and CNBC’s Squawk Box, as well as numerous radio shows around the country.

As Senior Research Director, global correspondent and co-editor of Smart Investing Daily, Sara has traveled all over the world in search of the best investment opportunities to recommend to her readers, be they in developed economies like France and Italy, in emerging markets like the Czech Republic and Poland, or in frontier terrain like Vietnam and Morocco. Her unique “holistic” approach of boots-on-the-ground research has given her an edge in today’s financial marketplace as she searches for the next investment opportunities in hot sectors like alternative energy, currency markets and commodities.

Jan. 27 (Bloomberg) — Global investors are bracing for the end of China’s relentless economic growth, with 45 percent saying they expect a financial crisis there within five years. An additional 40 percent anticipate a Chinese crisis after 2016, according to a quarterly poll of 1,000 Bloomberg customers who are investors, traders or analysts conducted Jan. 21-24. Bloomberg’s Andrea Catherwood reports. (Source: Bloomberg)

By Anton Eljwizat

The volatile of the EUR/CAD pair continues to be affected by the volatile forex market. The last two weeks has seen a lot of bullish strength in the EUR/CAD pair. However, as I demonstrated below, it seems that the pair’s bullish run may have run out of steam, and a bearish correction could be underway soon. This might be a good opportunity for forex traders to enter the trend at a very early stage and at a great entry price.

• Below is the 8-hour chart of the EUR/CAD currency pair.

• The technical indicators that are used are the MACD, Relative Strength Index (RSI), and Slow Stochastic.

• 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, signaling that the next move may be in a downward direction.

EUR/CAD Daily Chart

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.

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

The dollar was largely unchanged against the euro during the Asia session, but relinquished some ground to the yen. EURUSD traded 1.3641-1.3714. USDJPY traded 82.02-82.61. The FOMC kept current policy unchanged, given it still has concerns about low inflation and a weak labour market. No dissenting votes were cast. Clearly, although regional Fed Presidents Plosser and Fisher have publicly expressed some misgivings about QE2, they are willing to go along with the existing asset purchase program for now at least. Intriguingly, the policy statement appeared to signal a possible slowdown in the pace of UST purchases before the end of June, which would result in a more gradual end to the program. Any decline in the pace of purchases likely reduces the risk of an extension of the program beyond the end of June. This is entirely consistent with the views of our analyst team who continue to expect an end to asset purchases in June, followed by the first rate hike in Q1 2012. Elsewhere, the CBO markedly increased its budget deficit forecast for the current fiscal year to $1.5 trn from $1.06 trn.
EUR

ECB’s Nowotny said that markets were “too euphoric” about possible changes to Europe’s financial rescue mechanisms. He added that even if a Eurozone country were to restructure its sovereign debt, “the country would still remain in the Eurozone”.
ECB President Trichet said he would not exclude the possibility of a revamped financial rescue mechanism having the right to buy bonds, as this would be “useful in certain circumstances”. ECB Governing Council member Noyer agreed, noting that having the capacity “to intervene in secondary markets” would be “an interesting feature in some cases”. Both Trichet and Noyer stressed however that any enhancement to the rescue facility is ultimately a decision for governments.
ECB Executive Board member Stark said that, although interest rates are currently appropriate, the ECB “are ready to act at any moment, should it become necessary”. ECB Governing Council member Quaden said he is concerned about Belgian inflation and the ECB would “follow closely the evolution of the situation and we will evaluate and react if it is necessary”. Noyer and that he was “quite confident that we will be able to keep inflation at bay” adding that he was not signaling that the ECB is “going to raise interest rates”.
GBP

The minutes of the BoE’s Jan. 13 policy meeting revealed a further shift towards the hawkish end of the policy spectrum. Two votes were cast in favour of a policy rate hike, up from one previously: MPC member Weale now joins MPC member Sentence in calling for a 25bp hike. Also, some of those who had concerns over inflationary pressures but still voted for no change, said their decisions were ‘finely balanced’. Clearly such hawkish sympathies could easily translate into dissenting votes at a future meeting. MPC member Posen continued to vote for a resumption of the QE program and, as before, advocated a further ?50 bn in asset purchases. However, when the vote was taken, it was not yet known that GDP had suffered a -0.5% q/q contraction in Q4. This new piece of data would likely have surprised the MPC, and may give hawkish members some grounds to reconsider their stance.
AUD

The AUD fell after Australian Prime Minister Gillard announced the introduction of a new tax to fund reconstruction projects in the wake of the extensive floods. She hopes that the tax will ultimately raise A$1.8 bn. She estimated the total direct costs of the clean-up operation to the federal government would run to A$5.6 bn.

TECHNICAL OUTLOOK
GBPUSD support at 1.5752.
EURUSD BULLISH Big external resistance zone is at 1.3741/86; break through this would expose 1.3825. Support at 1.3573.
USDJPY BEARISH Remains bearish with focus on 81.85; breach of this level would expose 81.61 ahead of 80.93. Near-term resistance is at 82.67.
GBPUSD BULLISH Next support below 1.5752 lies at 1.5702. Initial resistance is at 1.6017.
USDCHF BEARISH Negative momentum with focus on 0.9301 key low. Initial resistance is at 0.9523.
AUDUSD NEUTRAL 1.0077 and 0.9804 mark the near-term directional triggers.
USDCAD NEUTRAL While initial resistance is at 1.0031 support lies at 0.9909.
EURCHF BULLISH Positive momentum with resistance at 1.3069 ahead of 1.3118. Near term support is defined at 1.2815.
EURGBP BULLISH Momentum is constructive with focus on resistance at 0.8691 Fibonacci level. Initial support lies at 0.8529.
EURJPY BULLISH Stalled in front of 113.03; breach of this level would expose 113.59 Fibonacci level next. Initial support lies at 111.64.

Forex Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

By Jared Levy, Editor, Smart Investing Daily, taipanpublishinggroup.com

Back in early October, after a visit to the Texas State Fair, I wrote about inflation and the global food “problem” and how you can take advantage. Every stock I mentioned in the report has seen substantial runs since then.

Keeping all of our greed under control, Sara recently detailed why commodities and the agri-stocks climbing with them needed a nap, and why maybe it was time to take profits.

What does this have to do with leveraged ETFs, you might be asking? Well, I thought I would use food as an intro, because it offers a great analogy for my views on leveraged ETFs (OK, and maybe I wanted to remind you how Smart Investing Daily keeps you ahead of the curve).

Both gluttony and greed are two of the “seven deadly sins,” but with food especially, some of us tend to eat more than we need to and with that, the very thing that brings us life and energy can also cause illness disease and death (in severe cases). I bring up these morbid reminders, not to scare you out of satisfying your hunger for food, but to remind (or inform) you that some investment vehicles (leveraged ETFs) might be just as unhealthy and perhaps even dangerous for your portfolio, forcing you to “eat” fees and expose yourself to risks you may not even be aware of. Too much of something is not always a good thing.

Leverage

According to Wikipedia, “leverage is a general term for any technique to multiply gains and losses.” You can attain leverage by borrowing money, purchasing fixed assets or using derivatives like options or futures. Basically, you can think of it as using a lesser amount of money to buy (or sell) a larger amount of something like a stock or other investments.

Leverage can be a good thing of course; many of us use our credit as a source of leverage, so we can purchase high-ticket items now that we feel may rise in value (take your home, for instance).

You also use leverage when you purchase a stock on margin from your broker.

There is no such thing as a free lunch; for that leverage we have to pay fees, costs, interest, etc. (These are called carrying costs.) Hopefully the amount that we are paying in carrying costs is less than the appreciation or income we are receiving from the asset we have leveraged.

If we take on too much leverage and the asset doesn’t appreciate or even worse, decreases in value, you will still have to digest tons of carrying costs. You will have to “consume” those costs with nothing to show for it, except for maybe heartburn, caused now by stress.

Greed and Leveraged ETFs

Leveraged ETFs like Direxion Daily Financial Bull 3X Shares (FAS:NYSE), Direxion Daily Financial Bear 3X Shares (FAZ:NYSE), Direxion Daily Gold Miners Bear (DUST:NYSE), Direxion Daily Real Estate Bull 3X Shares (DRN:NYSE) and many others have become extremely popular; they enable you to maybe make $2 or $3, even when a stock or index were to only move $1 (of course you would lose $2 or $3 for a $1 move in the opposite direction). There are even ETFs that move opposite to the way the underlying stock or index is moving. So if the stock is UP $1, the ETF would be DOWN $1 or $2 or $3, depending on what type of leverage they are using (talk about confusing).

For that leverage, ETFs charge you a fee — more on that in a second.

Leveraged ETFs are not evil; if you know exactly what you are doing, how they work and how to invest in them, you can profit. The reality though is that the “leveraged” part appeals to the greedy side of most retail investors, who have minimal knowledge of the way they work and end up losing money because they didn’t do their homework.

(Investing doesn’t have to be complicated. Sign up for Smart Investing Daily and let me and my fellow editor Sara Nunnally simplify the stock market for you with our easy-to-understand investment articles.)

The Mechanics of Leveraged ETFs

Leveraged ETFs were specifically created for professionals and short-term traders and most have nuances you must understand before investing even $1 into them.

Here is an example, using the Direxion Daily Financial Bull 3X Shares (FAS:NYSE), which is a very popular leveraged ETF.

The FAS is purported to return 3X (300%) the movement of the financial sector index on a daily basis, which it can do so, but not all the time and not if held for a duration longer than a day (yes, a day).

Here are some nuances of the FAS:

• FAS bases its return off of the Russell 1000 financial index (RIFIN.X) (make sure you know what the ETF you are trading is based off of, it may surprise you).
• FAS charges about 1% per year in basic expenses; there are also transaction costs and tax implications you should discuss with your financial and tax advisor.
• Most leveraged ETFs like FAS use derivatives and complex financial instruments like total return swaps to gain their leverage, which are created by and traded with firms like Goldman Sachs, UBS, Deutsche Bank and others, they (you) pay those firms a fee to provide this.
• Returns of the ETF over time may NOT be even close to the returns of the index it’s tracking!

Get this — In 2009, the Russell 1000 financial index was up about 30%. You would think that the FAS should be up three times that (maybe 90%) in the same time frame. Wrong! The FAS actually lost 34%, so if you were completely correct in your trade and held the FAS for a year, you lost money!

The Devil Is in Daily Rebalancing

Most leveraged ETFs get their leverage only for the day and then at the end of the day, that leverage resets, which can hurt you in the long term. This is the biggest profit siphon when investing in a leveraged ETF.

*Check out what happens if the Russell 1000 index moves up 3% today and drops 3% tomorrow and you are long the FAS.

If you bought FAS today at $30, it would move up about $2.70 (9%). At the end of today, the ETF would actually take those profits and invest them the next day starting fresh (this is rebalancing).

So tomorrow, you now have $32.70 invested at three times leverage, so if the Russell index then drops 3%, the FAS would drop 9% (of $32.70) and you would now lose $2.95, leaving you with a net loss of $0.25, even though the underlying index is actually flat.

Scared, Confused or Both?

In closing, don’t get sucked in with the lure of leverage, it may just leave you with a really bad case of high carrying costs and losses in your account. Know what is in the ETF and how it works before you trade. If you do trade them, you should only be trading very short term, less than three days, preferably intraday.

P.S. Join Smart Investing Daily’s Sara Nunnally as she sits down for a one-on-one discussion with Jordan Goodman of The Money Answers Show. Sara will discuss the new book, Barbarians of Wealth, she co-authored with Taipan’s Executive Publisher Sandy Franks… and how you can protect yourself against today’s greedy, self-serving barbarians in Washington and on Wall Street.

The Money Answers Show with Jordan Goodman airs on Monday, Jan. 24th at 12 pm PT. You can learn more about Sara’s interview here.

Editor’s Note: “The 30% Stepping Stone”! Did you know you could make a certain 30% return… every 12 months… without a bit of risk? Transform your financial destiny with Wealth Legacy Advisory.

About the Author

Jared Levy is Co-Editor of Smart Investing Daily, a free e-letter dedicated to guiding investors through the world of finance in order to make smart investing decisions. His passion is teaching the public how to successfully trade and invest while keeping risk low.

Jared has spent the past 15 years of his career in the finance and options industry, working as a retail money manager, a floor specialist for Fortune 1000 companies, and most recently a senior derivatives strategist. He was one of the Philadelphia Stock Exchange’s youngest-ever members to become a market maker on three major U.S. exchanges.

He has been featured in several industry publications and won an Emmy for his daily video “Trader Cast.” Jared serves as a CNBC Fast Money contributor and has appeared on Bloomberg, Fox Business, CNN Radio, Wall Street Journal radio and is regularly quoted by Reuters, The Wall Street Journal and Yahoo! Finance, among other publications.

By Anton Eljwizat

A bullish movement in EUR/GBP has pushed a number of technical indicators into the over-bought territory. As I will demonstrate below, the EUR/GBP may very well be heading for a reversal, as a bearish cross has taken place on the Slow Stochastic. In addition, the Relative Strength Index (RSI) indicates that the price of this cross currently floats in the overbought territory, signaling downward pressure. Forex traders can take advantage of this impending movement by having their Entry Orders in place to capture this reversal. Don’t forget your Stops and Limits!

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.

Source: ForexYard

The EUR/USD pair is once again floating around the 1.3700 level, as analysts are predicting yet another bearish day for the greenback. A batch of data is expected to show declines in the production, employment and home sales sectors of the US economy, which if true, will likely cause the EUR/USD to test new resistance levels.

Economic News

USD – Dollar Weakens on all Fronts

The dollar fluctuated against its main currency rivals yesterday, following the announcement that the Federal Reserve will keep interest rates at their current record lows for the foreseeable future. Investors interpreted the announcement as a sign that the US economic recovery still has a ways to go, and shorted the greenback as a result. The EUR/USD went as high as 1.3720 yesterday staging a slight downward correction. Currently the pair is trading around the 1.3700 level. The USD/JPY fell over 40 pips last night, and is currently trading at 82.15.

Today, a batch of US economic news may put further downward pressure on the dollar. At 13:30 GMT, traders will want to pay attention to the Core Durable Goods Orders and Unemployment Claims figures, while at 15:00, the Pending Home Sales figure is set to be released. All three indicators are known to create heavy volatility, and are all forecasted to show a decline in their respective sectors of the US economy.
Assuming today’s news comes in as forecasted; analysts are warning that the EUR/USD could test the 1.3785 resistance level. At the same time, the Unemployment Claims figure in particular has proven notoriously difficult to predict. Should the figure come in below the expected number of 407K, the dollar may see some short term gains in afternoon trading.

EUR – Euro Trading Mixed Against Main Currency Rivals

While the euro saw some fairly substantial gains against the dollar yesterday, the currency was bearish against the UK pound and Japanese yen. The EUR/GBP fell some 60 pips yesterday, and is currently trading around the 0.8605 level. The EUR/JPY pair fell over 40 pips yesterday before staging a slight correction. Currently the pair is trading around the 112.50 level.

Analysts attribute the mixed euro movement to predictions that the euro-zone will likely raise interest rates before the United States. At the same time the most recent Bank of England MPC meeting highlighted positive growth forecasts for the UK economy, resulting in gains for sterling.

Today, traders will want to pay attention to the major news events out of the United States. Current predictions are calling for a decline in several key US economic sectors, which if true, is likely to further boost the euro against the greenback. Analysts are currently predicting the EUR/USD pair could test the 1.3785 resistance level before the end of the day.

JPY – Yen Records Solid Gains Against USD and EUR

The yen saw a fairly positive overnight session against most of its main currency rivals. After reaching as high as 82.60 during yesterday’s session, the USD/JPY saw a downward correction and is currently trading around the 82.15 level. The EUR/JPY saw similar downward movement last night, falling just over 40 pips before staging a very minor upward correction. Currently the pair stands at 112.55.

The yen is forecasted to increase its gains today, assuming that economic indicators being released out of the US come in as forecasted. Negative US figures are likely to lessen the USD’s appeal as a safe haven currency while demand for the yen will likely go up.

Tonight, traders will want to pay attention to the Bank of Japan’s Monetary Policy Meeting Minutes, set to be released at 23:50 GMT. Any predictions for further growth in the Japanese economy will likely lead to further bullish movement for the yen.

Crude Oil – Oil Prices Remain Above $87 a Barrel

Crude oil received a substantial boost yesterday, as investors rallied around commodities following President Obama’s recent State of the Union Address. The price of crude oil rose from $86.18 yesterday, to as high as $87.75 before staging a slight bearish correction. Currently, the commodity is trading around $87.37 a barrel.

Today, traders will want to pay close attention to the main economic indicators set to be released out of the US. Currently analysts are forecasting that the USD will likely fall following today’s news. Typically, the price of oil rises when the dollar is bearish, as investors view the commodity as an alternative to the greenback. If crude oil does receive a boost today, it is likely to test the $88.00 resistance level.

Technical News

EUR/USD

Virtually all long-term technical indicators place this pair in overbought territory, indicating a downward correction is likely to occur today. The daily chart’s Stochastic Slow has formed a bearish cross, while the Williams Percent Range on the 8-hour chart is currently at -5. Traders are advised to go short today.

GBP/USD

Most technical indicators show this pair trading in neutral territory at the moment, although there are signs on the daily chart that the cross may be approaching the overbought zone. Traders are advised to take a wait and see approach today, as clearer signs are likely to appear later on.

USD/JPY

Both the Relative Strength Index and the Williams Percent Range on the 8-hour chart place this pair in oversold territory, indicating a bullish correction is likely to occur today. Traders are advised to open up long positions before the upward breach occurs.

USD/CHF

A bullish cross has formed on the 8-hour chart’s Stochastic Slow indicating that upward movement is likely to occur. Furthermore, the Relative Strength Index on the daily chart is currently in oversold territory. Going long with tight stops may be the preferred strategy today.

The Wild Card

CAD/CHF

The Williams Percent Range on the daily chart is currently in oversold territory and angling up, indicating that bullish movement is likely to occur for the pair. This theory is supported by a bullish cross on the 8-hour chart’s Stochastic Slow. Now may be a great time for forex traders to open up long positions for the pair, before the upward breach takes place.

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.

The US dollar declined versus the euro on Wednesday as the US Federal Reserve decided to keep its low interest and maintains their bond purchasing program. According to the Federal Reserve US economic growth has been sluggish for which the decision of keeping low interests rates were taken.

The dollar index DXY which measure the greenback’s performance versus its major six rivals declined to 77.776 as compared to 77.973on Tuesday’s late trading session.

The Euro advanced to 1.3703 against the US dollar as compared to $1.3682 on Tuesday. Against the Japanese Yen the US dollar traded at 82.26 as compared to 82.23 on Tuesday’s late trading session.

Global Head of Currency Marc Chandler form Brown Brothers Harriman commented, “The continuation of Treasury purchases, coupled with the modification of the labor market assessment triggered a quick push lower on the dollar.

The greenback did moved up for a brief movement in start of US trading session on Wednesday as US homes sales increased more than expected. But later on selling pressure increased in the US dollar on decrease of treasury yield as President Obama has proposed to stop domestic discretionary spending.

The British Pound increased by 0.8 percent to 1.5912 versus the US dollar as per latest Bank of England’s meeting six members voted for unchanged monetary policy. Two of the members voted to increase the bank rate by 25 basis points while Adam Posen proposed to increase the asset purchase program by 50 billion pounds to 250 billion pounds.

According to experts Pound Sterling trading is more like a roller coaster and high volatile changes could be expected.

About the Author

Daily forex trading news written by Rehan from DailyForexTrade.com

By Donald Saunders

We are all familiar with such things as flight simulators used to train airline pilots, but did you know that there are also such things as forex simulators?

Forex simulators, which operate very much like many PC games which start out by giving you a scenario and then setting you a target, allow you not simply to practice trading in a safe environment without risking any money, but also allow you to ‘rewind’ your trading and analyze just what you got right and what you got wrong. They also allow you to practice trading in your own time and at your own pace and can pack weeks of conventional training into just a few days.

Here are just some of the benefits of using a forex simulation package:

Learning currency relationships. Many traders have no problem understanding the workings of a single currency but find it difficult to get used to working with a currency pair. A simulator however teaches and reinforces the relationship on one currency to another and the impact that one currency can have on another.

Understanding market conditions. An understanding of the forex market and, more importantly, a knowledge of how to use the market to your own advantage is critical to success. Simulation updates traders on economic conditions and news which can affect the market and shows, often quite dramatically, how economic events can move trading currencies. This is a powerful lesson to learn because it is fundamental to gauging when to enter and when to exit the market.

Differentiating between short-term and long-term trading. By allowing you to work with short-term and long-term trades, simulation clearly demonstrates that there are significant differences between to two and that forex traders often choose to trade in one or the other, but not both.

Understanding the advantages and dangers of caution. All too many traders, and especially novice traders, are too cautious when trading and simulation allows you to throw caution to the wind and experiment with setting stop losses less tightly than you would otherwise do in live trading.

Identifying trading preferences. Simulation can allow you to trade independently or with the help of a broker and, in so doing, decide whether you prefer to involve a broker in your trading decisions or to make your own trading decision, based upon your own knowledge and advice sought from a variety of different reputable sources.

Identifying and setting trading strategies. On of the most important things for any forex trader is to set himself a trading strategy and then stick to it. However, establishing the right trading strategy can be difficult and traders are often tempted to switch strategies believing that an alternative just might be more profitable. With simulated trading you have the opportunity to test out as many different strategies as you wish quickly and in a safe environment and to select the best strategy before you enter the world of live trading.

The world of forex trading is both exciting and profitable but it can also be very dangerous if you do not know exactly what you are doing. The first step for any novice trader must therefore be to learn everything he can about the currency trading world and then get in some serious practice before beginning live trading.

About the Author

LearningForexTradingOnline.com provides the ideal place to learn forex trading and covers everything from the history of forex to choosing forex charting software.