Monday, 5 Oct 2009

USD Awaits ISM Non-Manufacturing PMI

The most important economic release today is the U.S. ISM Non-Manufacturing Index at 14:00 GMT. This publication is set to determine the level of the EUR/USD cross as the trading day continues to unfold. So far today, the USD has recorded mixed results vs. its main currency pairs. Against the EUR, it is trading lower, due to the advance in stocks, and investors realizing that the USD is overvalued with regards to the EUR/USD pair. Investors deduced this conclusion from the recent G7 meeting in which the 7 finance ministers from the 7 most industrialized nations avoided speaking about the USD's weakness.

So far today, the GBP/USD pair is trading lower by 70 pips at the 1.5910 level, as the British Service PMI failed to lend enough support to the British currency in early trading. The USD/JPY cross is unchanged at 89.75, as the market awaits the key release from the U.S. However, the USD is trading higher versus the CHF and CAD. Traders are advised to open their positions in the majors now, as the U.S. manufacturing data is set to drive the trading for the major crosses going into tomorrows' trading. Therefore, to miss out on this opportunity would be a very bad choice indeed.

EUR/USD Coming Reversal

Forex traders, please have a look at the EUR/USD 1-week Chart. It indicates that there is an imminent bearish trend coming. Point 1: The MACD shows the pair is overbought, indicating downward pressure. Point 2: The Relative Strength Index (RSI) indicates that the cross is floating in the overbought territory, signaling that a downward correction will happen anytime soon.