Daily Forex Reports | Thursday, 17 April 2008 07:20 UTC
The USD extended losses yesterday after the economic reports from the
U.S. showed lower than expected inflation and a sharp fall in Housing
Starts, suggesting more possible Federal Reserve Interest Rate cuts
ahead. The greenback depreciated 1% reaching 1.5979 vs. the EUR from
1.5790 during the prior trading day. A separate report showed yesterday
that U.S. Industrial Production rose 0.3% in March, beating economists'
forecast for a 0.1% decline. But despite the surprising printing, the
news had little impact on the greenback, failing to halt its descent
against the EUR. Also yesterday, a government report showed that U.S.
Consumer Prices rebounded in March mainly due to the rising Oil prices.
The inflation buildup comes as Oil prices hit fresh record highs in
recent weeks, pushing up the price of gasoline. Crude Oil topped $115 a
barrel Tuesday, resulting in a 19% gain so far this year. Moreover,
rising inflation complicates the Fed's task to keep pumping enough
liquidity into financial markets to ease turbulence. The credit crunch
and housing downturn are also hurting the broader economy, with Fed
Chairman Ben Bernanke recently acknowledging the risk that the economy
could slide into a recession.
The pair breached the very significant level of 1.5900, reaching at peak levels to 1.5970 and setting a fresh all time high. The 4 hour chart is showing a strong bearish cross, as the daily chart indicates a continuation of the bullish trend. Buying on dips might be a perfect strategy today.
The daily chart is shaping into a narrowing bearish channel as the cable now floats in the middle of it. The Slow Stochastic indicates the continuation of the bearish trend and the 4 hour RSI is strengthening the bearish notion. Going short appears to be preferable today.
The bullish trend continues at full steam as the pair shows no immediate signs of a halt. The 4 hour Slow Stochastic is showing a positive slope and the RSI is floating at 50 which points at additional bullish momentum. There seems to be no upcoming correction on the local level, and going long looks like the right decision today.
The aimless floating of the pair continues on the daily chart, and no major price break has occurred since mid March. The daily oscillators are showing neutral momentum, and the hourlies are showing moderate bullish momentum. The Bollinger Bands are still quite tight which indicates an upcoming move, so traders are advised to wait for the break and swing.
The Wild Card
There has been a very sharp breach through the upper barrier of the bearish channel on the 4 hour chart. The Slow Stochastic is showing that the momentum is still very high, and that the next target price is around 201.90. This is a great opportunity for forex traders to swing in a very strong breach with high profit potential.
Written by Forexyard.com
Forex Market Analysis
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