Home  Daily Forex Reports An Interesting Week for Trading
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An Interesting Week for Trading |
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Monday, 27 October 2008 |
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The USD may in fact lose its direction this week from the opposing
forces affecting it. The EUR may see a reversal emerge from world data
worse than its own, and the Japanese economic slowdown is cutting into
the value of the JPY. This week, traders should expect some intense
volatility in the market as these elements play off one another and
generate one of the more interesting weeks for investors. Don't miss
out!
Economic News
USD - Indicators
Play Tug-o-War with USD
Over the weekend the USD became entangled in a push and pull movement
emerging as a result of contradicting data. On one hand the USD saw
bullishness because of the positive figure released for Existing Home
Sales last Friday. On the other hand, this weekend revealed that U.S.
GDP is down 0.5% from last quarter, a strong indicator of a recession
and subsequent devaluing of the USD. As an impact of this contraction
in the nation's economy, analysts are now forecasting the Fed to cut
Interest Rates once more, which will then boost the value of the
greenback.
Dipping below 1.25 against the EUR last week, the Dollar has only moved
a small amount since the opening of this week's market. This price
flotation arose from the positive and negative economic data emanating
from the United States' financial and housing sectors. The forecast for
today's New Home Sales figure is set to be lower than its last figure
and if true will indicate a further damaged housing sector.
The prediction for a cut to Interest Rates is an indicator of two
factors. First, it shows the Fed is willing to take the necessary steps
to keep liquidity high, as well as continue to allow the market to be
flooded with cash until it regains some of its vitality. Second, it
illustrates the weakness the U.S. economy is facing. If economic growth
were taking place, rate cuts wouldn't be necessary. Since they are
becoming more of a necessity, it is safe to say that this is because of
the weakness the Fed sees in the market and the national economy.
Generally speaking, this is not a good thing as it spells recession
quite clearly.
Looking ahead, every day this week will witness the release of a major
economic indicator. Starting with New Home Sales and Consumer
Confidence today and tomorrow, respectively, and ending the week with
the Federal Funds Rate and Advanced GDP on Wednesday and Thursday. This
will be one of the more important weeks of the year for traders to
watch the news and follow the market closely. Some major price shifts
are in the making!
EUR - Finally Some Good News Reaches Europe
With the Ukraine and Hungary receiving aid to help stave off financial
collapse, the Euro-Zone is making up some of its losses at last.
However, these corrections don't appear to be developing into long-term
trends. The EUR is merely buoyed against its currency counterparts as
it bobs up and down in the market without any clear direction. Some
analysts would call this a bad thing, but it can't be worse than the
plummeting in value it experienced these past weeks. Any move that
isn't bearish for the EUR is a good thing at this point.
The EUR has gone through some tough times lately and, unfortunately,
they are not over yet. Germany is set to lead this week's economic
releases and, to belabor the point further; almost every indicator to
be released by the Euro-Zone's largest economy is forecast to be lower
than its last figure. The positive aspect of this information is that
the rest of the world's economic news may in fact boost the EUR into a
reversal from last week's trends.
Important to remember this week is that the EUR is expecting negative
news releases to arrive one after the other, but this news does not
carry as much weight as the news expected from the rest of the world,
particularly the U.S. As a result, traders may in fact see a small
reversal from the EUR over the next few days, but should not anticipate
this reversal to last very long. Get in on the upward movement whenever
it starts but watch it closely for any changes as they may come
quickly, and without warning. This is a great week to be trading!
JPY - JPY Running out of Steam
Japan recently stated that it would allow for up to 10 trillion yen to
be injected into its banks. The initial amount of this rescue package
was just 2 trillion yen. The reason for the increase is that the recent
financial turmoil and housing crisis has dampened the economy to a
point where 2 trillion yen simply would not do the job to fix the
anticipated problems.
After climbing as high as 91.80 versus the USD last week, the JPY has
started a slight correction to its recent bullish run and now stands
close to the 94.00 mark. As Japan's economy begins to feel the effects
of the global recession, its currency is not predicted to gain as much
as it has in recent weeks, and will likely see a stronger correction in
the near future.
OIL - No End in Sight for Crude Oil's Bearish Run
Taking one look at the anticipated production cuts, the price of Crude
Oil turned its back and continued its descent. This move came after
only a short period of hesitation at the end of last week. Recessionary
fears and worsening economic indicators are driving demand for Crude
Oil lower and lower lately.
Traders witnessed a golden opportunity these past few weeks as the
price of Crude Oil still had not ceased its month-long bearish run at
the end of last week's trading sessions. Today's early trading sessions
don't appear to be any different either. Generally good advice for
those trading Crude Oil in today's market: taking a sell position might
be wise.
Technical News
EUR/USD
The pair crossed the key psychological level of 1.2500 for the first
time since last year, further demonstrating how strong the current
downtrend is. On the daily chart, the pair is still floating beneath
the Bollinger Band's lower border, indicating that the pair might
extend its bearish move. Going short with tight stops might be the
right choice today.
GBP/USD
The Cable is in the middle of a very intensive downtrend that started a
week ago and shows great momentum that on a bigger scale appears to
have more room to run. Currently, all oscillators on the hourly chart
are pointing down and it seems that going short will be the right
choice today.
USD/JPY
There is a very accurate bearish channel forming on the daily chart as
the pair is now floating in the middle of it. Currently, as all
oscillators on the daily chart are pointing down, it seems that the
downtrend will extend. Going short might be a good strategy today.
USD/CHF
The daily chart is showing that the pair is still in the bullish
configuration; however, the RSI is already floating in the overbought
territory. On the contrary, the hourly's and the 4-hour chart's Slow
Stochastic are both showing a bearish cross. It appears that the
possible next move might be a bearish one. In that case traders are
advised to swing in after the break.
The Wild Card
Oil
There is still a bearish configuration on the daily chart, indicating
that the momentum is still down. The Slow Stochastic flows high
supporting the notion that there is still room to run for this trend.
In the shorter time frame there is a bullish cross forming on the
hourlies indicates that there might be a small bullish correction
before the bearish move resumes. Forex traders can maximize profits by
selling on highs and taking advantage of a currently bearish trend.
Written by: Forexyard.com
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