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Monday, 13 Jul 2009

High Volatility might Continue this Week

The dollar was slightly more volatile over the past week than usual, and the explanations for this have been getting trickier by the day. As for this week, forex traders are advised to take positions on trades, as a string of data releases coming out of Unites States, Europe and Japan are likely to affect the greenback's main currency crosses.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trendnodowndownnodownup
Weekly Trendnodowndownnodownup
Resistance1.40001.619093.201.09550.78400.8720
1.39801.617093.001.09350.78200.8700
1.39501.614092.701.09050.77900.8670
Support1.38901.608092.101.08450.77300.8610
1.38601.605091.801.08150.77000.8580
1.38401.603091.601.07950.76800.8560

Economic News

USD - The Greenback Waives Up Its Friday's Gains

The U.S dollar had risen on Friday, against most major currencies amid fears of weak U.S. corporate profits and fading hopes for a global recovery. The USD regained the upper hand as concerns about the global economic outlook curbed investor appetite for riskier assets. Versus the Japanese yen however, the dollar bought 92.37 yen, slipping from 92.99 yen Thursday. The dollar tumbled to 91.81 yen Wednesday, its lowest level versus a broadly higher Japanese currency in more than 4 months.

A report showing U.S. consumer sentiment soured in early July also boosted the currency on Friday. The Dollar can rise if investors sell risky assets such as stocks and commodities and buy back the low-yielding dollars used to finance those purchases, analysts have said.

However, in early Monday trading the USD dipped against the EUR, with the single European currency rising 0.2% to $1.3971, regaining some of the ground it lost against the Dollar on Friday. According to analysts prognosis the U.S dollar may decline to $1.45 per EUR in 3 months, before rebounding to $1.37.

EUR - The British Pound Declines on U.K. Recession Fears

The EUR rose versus the greenback Monday on prospects European Central Bank (ECB) President Jean-Claude Trichet will today signal policy makers will refrain from cutting Interest Rates. The European currency also edged up 0.3% against the Japanese yen to 129.51 yen, having pulled up from last week's low of 127.00 yen, which was the lowest in almost 2 months.

Meanwhile, the British pound fell against the Dollar for a 2nd week as U.K. stocks fell to their lowest in more than 2 months on indications Europe's second-largest economy remains mired in a recession. The British currency also recorded its biggest weekly loss against the Yen in more than 5 months, as it tumbled 4.6% this week to 149.62 yen. After climbing almost 13% against the U.S dollar in the first half of the year, the Pound is sliding as investors pare back expectations for a revival in the U.K. economy. The Organization for Economic Cooperation and Development said on June 24 that U.K. Gross Domestic Product will likely shrink 4.3% this year, thus adding to the GBP negative picture.

Yen - Yen Losses on Speculation Goldman Sachs Profit Will Surge

The Japanese currency weakened on speculation Goldman Sachs Group Inc. will report the largest profit since it set earnings records in 2007, reviving demand for higher-yielding assets. The Yen also fell against all 16 major currencies after the opposition Democratic Party of Japan won Tokyo elections yesterday, spurring concern that political uncertainty in the world's second-largest economy will worsen.

The Yen surged last week as equities and oil prices fell as optimism about a speedy recovery in the global economy faded, with investors fretting that a rally in risk assets since March may have been overdone.

Oil - Crude Falls below $60, Heading For Further Loss

Crude Oil prices fell below $60 a barrel Friday, marking their biggest weekly loss in 6 months as an International Energy Agency (IEA) report reaffirmed concerns about weak demand. Also weighing on Oil prices Friday, data showed U.S. consumer sentiment fell sharply in early July, adding to the recession worries that also dragged U.S. stocks lower.

Oil has tumbled 10.3% this week, its biggest weekly loss. This sharp decline came after the Commodities Futures Trading Commission, the U.S. futures market regulator, said earlier this week that it was considering applying limits on speculation in energy futures.

The market has been too optimistic about a global economic recovery later this year, but that now looks unlikely to happen, so Crude Oil prices are declining. According to analysts Crude prices could see more corrections in the short term as external factors which have helped oil's recent rally, including a weak U.S. dollar and rising equities, are set to reverse course.

Technical News

EUR/USD

The typical range trading on the daily chart continues. The 4-hour chart RSI is floating in neutral territory. However, the pair currently sits near the bottom border of the hourly chart's RSI, suggesting an upward correction may be imminent. Going long with tight stops may turn out to be a good strategy today.

GBP/USD

The pair currently sits near the bottom border of the daily chart's RSI, suggesting an upward correction may be imminent. The upward direction on the hourly chart's Momentum oscillator also supports this notion. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

USD/JPY

The hourly chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the daily Chart's RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

USD/CHF

The pair has been range-trading for a while now, with no specific direction. The Daily chart's Slow Stochastic providing us with mixed signals. The 4 hour charts do not provide a clear direction as well. Waiting for a clearer sign on the hourlies chart might be a good strategy today.

The Wild Card

Crude Oil

The Oil prices are once again dropping, and it is currently traded around $59.10 per barrel. However, the daily chart's RSI is floating in an oversold territory suggesting that a recent downwards trend is loosing steam and a bullish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage

Current Time: 07/24 22:37 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
07/24
00:30JPY+ Tokyo Core CPI y/y2.8%--3
00:30JPY+ National Core CPI y/y3.4%--1
00:50JPY+ CSPIy/y3.6%--1
07/25
01:00EUR+ Spanish HPIq/q---3
02:00NZD+ ANZ Business Confidence42.8--5
07:00EUR+ GfK German Consumer Climate8.9--3
07:00EUR+ GfK German Consumer Climate8.9--3
09:00EUR+ German Ifo Business Climate109.7--5
09:00EUR+ M3 Money Supply y/y1.0%--3
09:00EUR+ Private Loans y/y-2.0%--3
09:30GBP+ Prelim GDP q/q0.8%--5
09:30GBP+ Index of Servicesq/q0.9%--1
13:30USD+ Core Durable Goods Orders m/m-0.1%--5
13:30USD+ Durable Goods Orders m/m-1.0%--3
14:00EUR+ Belgian NBB Business Climate-6.2--1
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