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Friday, 18 Mar 2011

G7 Agrees To Intervene In Order To Weaken Yen

The Group of seven industrial nations has agreed on Thursday evening to stage a coordinated currency intervention in order to weaken the Japanese currency. As a result, the yen fell about 150 pips vs. the U.S. dollar and about 350 pips vs. the euro and the British pound.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trendupupupupupup
Weekly Trendupupnodowndownup
Resistance1.41451.623582.600.91151.00100.8790
1.41251.621582.400.90950.99900.8770
1.40951.618582.100.90650.99600.8740
Support1.40351.612581.500.90050.99000.8680
1.40051.609581.200.89750.98700.8650
1.39851.607581.000.89550.98500.8630

Economic News

USD - Dollar Falls versus Majors As Positive U.S. Data Spurs Demand for Higher-Yielding Assets

The U.S. dollar fell against most of its major currency counterparts during Thursday's trading session. The dollar saw a 170 pip slide against the euro, and the EUR/USD pair reached as high as the 1.4050 level. The dollar also saw a 150 pips fall vs. the British pound.

The dollar depreciated yesterday after positive U.S. economic releases have boosted demand for higher-yielding assets, such as the euro and the pound. The Consumer Price Index (CPI) in the U.S. rose by 0.5 percent in February, and the core CPI went up by 0.2 percent. The cost of living in the U.S. climbed more than forecast due to the highest food prices since 2008 and rising fuel costs.

In addition, initial Unemployment Claims in the U.S. fell by 16,000 in the week ended in March 12th. Applications for jobless benefits have decreased for a third week in the last four, signaling progress in the labor market.

Nevertheless, during night-trading, the dollar saw a sharp appreciation against the Japanese yen after the G7 agreed to conduct a coordinated intervention to weaken the Japanese currency.

As for today, traders should focus on two main events that are likely to dominate the market - the Japanese struggle to fight nuclear catastrophe, and developments from Libya which might include U.N. intervention. Any update regarding these two nations is likely to have a rapid impact on the market.

EUR - Euro rallies Against Dollar and Yen

The euro rallied against the U.S. dollar and the Japanese yen on Thursday's trading session. The euro gained about 170 pips vs. the dollar, and the EUR/USD pair reached as high as the 1.4050 level. The euro also soared against the yen as well, and the EUR/JPY pair is trading near the 114.00 level.

The euro's strengthening yesterday was mostly affected by overseas developments. The euro gained against the U.S. dollar after reports have shown that the U.S. economy continues to recover. The U.S. Consumer Price Index rose by 0.5% in February, as food costs reached their highest level since 2008. In addition, initial unemployment claims in the U.S. fell by 16,000 last week, signaling that the labor market recovers as well. This has supported risk-appetite in the market, and as a result strengthened the euro vs. the dollar.

The euro climbed against the yen after the G7 said they had agreed to stage a coordinated currency intervention in order to weaken the surging Japanese currency.

Looking ahead to today, Traders are advised to follow the German Producer Price Index release, which is scheduled at 07:00 GMT. A positive data might to strengthen the euro further. Traders should also follow all the updates from Japan and Libya, as these are likely to have a large impact on the market for the near future.

JPY - G7 Agrees To Intervene In Order Weaken Yen

After soaring to a record high against the U.S. Dollar, the Japanese yen saw a sharp bearish correction during night-trading after G7 agrees to devaluate the Japanese currency.

The yen slid after the Group of seven nations said they had agreed to stage a coordinated currency intervention in the attempt to support the Japanese economy following the devastating earthquake and tsunami affects.

The yen saw a 150 pips fall against the yen and the USD/JPY pair climbed towards the 81.50 level. This move had an even bigger impact on the euro, as the EUR/JPY pair bounced by 350 pips towards the 114.50 level.

As for today, the Japanese nuclear crisis will continue to dominate global news. Traders are advised to follow any update from Japan, as it is likely to have an instant impact on the yen. Traders should also follow any further indications regarding an intervention by the G7 or the Bank of Japan.

Crude oil - Crude Oil Climbs to $103.50 a Barrel After U.N. Authorizes Military Action in Libya

Crude oil surged to $103.50 a barrel during Thursday night trading, after the United Nations have authorized a military strike to curb Libyan leader Muammar Gaddafy. The U.N. Security Council vote came several hours after Gaddafi threatened to storm Benghazi overnight.

As a result, crude prices, which were already surging, saw a sharp 200 pips gain, and crude climbed from $101.70 to $102.85 a barrel almost instantly. During the night crude oil prices continued to climb, and reached as high as $103.50 a barrel.

Looking ahead to today, traders should first and for most remain updated regarding any development in Libya. Traders should take under consideration that any update regarding a clash involving U.N. troops has potential to boost crude prices event further.

Technical News

EUR/USD

The EUR/USD pair continues to rise, and reached as high as the 1.4085 level yesterday. Currently as the 4-hour chart's MACD continues to point upwards, the pair might see further bullishness, with potential to reach the 1.4120 level.

GBP/USD

The Cable has been seeing range-trading over the past few days, trading between the 1.5980 and the 1.6200 levels. The pair now seems on its way towards the higher boarder of the range. If manages to breach it, the pair has potential to reach as high as the 1.6350 level before the weekend.

USD/JPY

The USD/JPY saw a sharp bullish correction yesterday, following the G7 decision to devaluate the Japanese currency. A bullish cross on the 4-hour chart's Slow Stochastic signals that the bullish move has more steam in it. Going long might be the right choice today.

USD/CHF

The USD/CHF is in the midst of a very strong bearish trend. In addition, as both the MACD and the RSI on the daily chart provide bearish signals, the pair looks to proceed with the bearish movement today. Going long might be the right strategy today.

The Wild Card

Crude Oil

Crude oil prices continue to surge in a daily basis, and by now have reached as high as the $103.50 level. Currently as all oscillators on the daily chart are providing bullish indications; it seems that another bullish movement might take place today. This might be a great opportunity for forex traders to join a very popular trend.

Current Time: 10/22 13:04 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
10/22
13:30AUD+ MI Leading Index m/m-0.1%- -0.1% 1
13:50JPY+ Trade Balance-0.92T-0.91T -1.07T3
14:30CAD+ NZD Core Retail Sales m/m-0.6%0.2%-0.3%5
14:30CAD+ Retail Sales m/m-0.1%0.1% -0.3%3
14:30USD+ Core CPI m/m0.0%0.2%0.1%5
14:30USD+ CPI m/m-0.2%0.0%0.1%3
16:00CAD+ BoC Monetary Policy Report---5
16:00CAD+ BoC Rate Statement---5
16:00CAD+ Overnight Rate1.00%1.00%-5
16:30USD+ Crude Oil Inventories8.9M--3
17:15CAD+ BOC Press Conference---5
21:00GBP+ MPC Member Weale Speaks---3
23:00AUD+ RBA Gov Stevens Speaks---5
23:45NZD+ CPI q/q0.3%0.5%-5
10/23
01:00EUR+ EU Economic Summit---3
02:30AUD+ NAB Quarterly Business Confidence6--3
02:30USD+ Unemployment Claims 264K--5
03:35JPY+ Flash Manufacturing PMI51.752.1-1
09:00EUR+ French Flash Manufacturing PMI48.848.6-5
09:00EUR+ French Flash Services PMI48.448.2-3
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