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Thursday, 25 Nov 2010

USD Uptrend to Continue; Thanksgiving Day Causes Thin Trading

Britain and Japan appear to be releasing the bulk of today's news as today is Thanksgiving Day in the U.S, and there is no economic data releases from the region today, which means we may see a day of trading with low liquidity and therefore increased volatility. Day-traders can take advantage of these intense trading days by swinging within the larger-than-normal price fluctuations.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trenddowndowndowndowndownno
Weekly Trenddowndownnoupdownno
Resistance1.34351.586084.501.00700.98850.8560
1.34001.582584.201.00350.98500.8525
1.33501.579083.851.00000.98150.8490
Support1.32701.571083.150.99350.97400.8420
1.32351.567582.850.99000.97100.8385
1.32001.563082.500.98650.96750.8350

Economic News

USD - Low Volatility Expected In Observance of U.S Thanksgiving Day

The U.S dollar rose broadly yesterday against most of its major currency pairs after data showed the number of U.S. workers filing for first-time jobless benefits slipped in the latest week, adding to hopes the job market is improving. By yesterday's close, the USD rose against the EUR, pushing the oft- traded currency pair to 1.3340. The dollar experience similar behavior against the GBP and closed at 1.5780.


A leading indicator released yesterday was U.S. Unemployment Claims. The number of Americans filing first-time claims for jobless benefits dropped unexpectedly last week to the lowest in more than two years, another sign firings are slowing as the economy pulls out of the recession. The total number of initial claims fell to 407,000 last week from 441,000 claims filed the week before
As the U.S economy stabilizes, currency traders have started to focus more on fundamentals such as economic growth and short-term interest rates. That shift, just getting underway, could take the shine off the soaring USD in the coming months. A stronger currency is important to the U.S. because it entices foreign investors to Treasury debt that finances the nation's record budget deficit. The downside is that it may restrain profit growth at companies with international sales by making U.S. exports more expensive.

With US banks celebrating Thanksgiving Day, the forex market will be experiencing thin trading today. Without this economic giants pumping liquidity into the market, most current trends will remain as they are for the next day or two, and traders can benefit by jumping into these trends before they finally come to an end.

EUR - EUR/USD Hits Two-Month Low

The EUR hits a two-month low against the dollar and yen on Wednesday as persistent worries over Ireland's fiscal position fuelled risk aversion, prompting safe-haven flows into the low yielding Japanese currency and US dollar. By yesterday close, the euro fell as low as $1.3283, its weakest since September, and was last down 0.3% at $1.3325. The 16 nation currency experience similar behavior against the JPY and closed at 111.40.

Investors worried that a euro-zone fiscal crisis, centered for now on Ireland, could spread to other indebted countries, notably Portugal and Spain. Ireland's four-year plan, announced Wednesday, to cut its budget by 15 billion euros did little to cheer the market.

Investors may look for the unusual price volatility to continue in the EUR/USD as the pair attempts to stabilize and find new support and resistance lines. The large price jumps such as these are not common place and present terrific opportunities to take advantage of the price swings for large gains.

JPY - JPY Sees Mixed Results versus the Majors

The Yen completed yesterday's trading session with mixed results versus its major currency pairs as investors are choosing the Dollar over the Yen for a safe haven trade. The JPY fell against the USD and closed around 83.45. However; the Japanese Yen rose almost 100 pips versus the EUR, closing at 111.40.

Looking ahead to today, the news event that may have a very large impact on the JPY and its main currency pairs in today's trading is the Tokyo Core CPI around 23:30 GMT. This report is likely to Impact the JPY volatility. Traders should pay close attention to the market as there is an opportunity for traders to capitalize on the fluctuations which are likely to follow this release.

Crude Oil - Crude Gains Close to 3%

Oil prices rose more than 3% on Wednesday as data that suggested economic recovery is improving and pre-Thanksgiving holiday short covering helped oil post its biggest percentage gain in four months.
Crude oil advanced today for the most in four months following a report showed that U.S. Unemployment Claims dropped to the lowest level since 2008, boosting optimism that the economic recovery will accelerate. Jobless claims declined by 34,000 to 407,000 in the week ended November 20, beating estimations for 434.000 unemployment applications.
Looking ahead to tomorrow, U.S. banks will be closed in observance of Thanksgiving Day. Traders are advised to follow the updates regarding the Irish debt crisis, as any development on this issue is likely to have a large impact on the market.

Technical News

EUR/USD

The EUR/USD cross has experienced a bearish trend for the past 3 days. However, it seems that this trend may be coming to an end. The RSI of the 4-hour chart shows the pair floating in the over-sold territory, indicating that an upward correction will happen anytime soon. Going long with tight stops might be a wise choice.

GBP/USD

The price of this pair appears to be floating in the over-sold territory on the 4-hour chart's RSI indicating an upward correction may be imminent. The upward direction on the hourly chart's Momentum oscillator also supports this notion. When the upward breach occurs, going long with tight stops appears to be preferable strategy.

USD/JPY

The USD/JPY cross has been experiencing much bullish behavior in the past 2 weeks. However, there is much technical data that supports a bearish move for today. The RSI of the daily chart indicates that the pair floats in the overbought territory, leading to the conclusion that a downward correction is imminent. Going short with tight stops may turn out to pay off today.

USD/CHF

The bullish trend is losing its steam and the pair seems to consolidate around the 0.9965 level. The daily chart's RSI is already floating in an overbought territory suggesting that a recent upwards trend is losing steam and a bearish correction is impending. Going short with tight stops might be a wise choice.

The Wild Card

Crude Oil

Crude Oil prices rose significantly yesterday and peaked at $84.35 per barrel. However, there is a bearish cross on the 4-hour chart's Slow Stochastic suggesting that a recent upwards trend is losing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.

Current Time: 10/30 15:53 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
10/30
15:30USD+ Natural Gas Storage 94B83B 87B 1
22:45NZD+ Building Consents m/m0.0%--3
10/31
00:00JPY+ Monetary Policy Statement---5
00:00JPY+ BoJ Press Conference---5
00:30JPY+ Household Spendingy/y-4.7%-4.0%-3
00:30JPY+ Tokyo Core CPI y/y2.6%2.5%-3
00:30JPY+ National Core CPI y/y3.1%3.0%-1
00:30JPY+ Unemployment Rate3.5%3.6%-1
01:05GBP+ GfK Consumer Confidence-10-1
01:30AUD+ PPI q/q-0.1%--5
01:30AUD+ Private Sector Credit m/m0.4%0.4%-1
06:00JPY+ Housing Startsy/y-12.5%-17.1%-1
07:00JPY+ BoJ Outlook Report---3
08:00EUR+ German Retail Salesm/m2.5%-0.8%-3
08:45EUR+ French Consumer Spending m/m0.7%-0.3%-3
10:00EUR+ Italian Monthly Unemployment Rate12.3%12.4%-1
11:00EUR+ CPI Flash Estimate y/y0.3%0.4%-5
11:00EUR+ Unemployment Rate11.5%11.5%-3
11:00EUR+ Italian Prelim CPI m/m-0.3%-0.1%-1
13:30CAD+ GDPm/m0.0%0.0%-5
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