Month: March 2010

Source: ForexYard

During last week’s trading, the Dollar saw a bearish correction against the Euro, following several weeks of a consistent bullish trend. This week’s most interesting question is whether the Dollar will resume the bullish trend, or might the Euro’s recovery proceed? This could be answered on Tuesday when the U.S. Interest Rate decision will be announced. If the Fed will surprise and hike rates, it has potential to create mayhem in the market.

Economic News

USD – U.S. Interest Rate Announcement Expected Later On This Week

The Dollar saw mixed results against the major currencies during last week’s trading session. The Dollar dropped about 100 pips against the Euro, and the EUR/USD pair saw a weekly high at the rate of 1.3793. The Dollar saw volatile sessions against the Yen and the Pound, and the two pairs didn’t see a significant trend.

The Dollar failed to rise during last week’s trading as several economic indicators delivered worse than expected figures. The Federal Budget Balance reflected a 220.9B deficit in the government’s spending during February, failing to reach results for 207.5B deficit. The weekly Unemployment Claims showed that 462,000 individuals have filed for unemployment insurance for the first time during the past week, failing to reach expectations for a 456,000 result. Currently it seems that even though the Dollar is generally strengthening, for as long that the economic data from the U.S. won’t show a recovery – the Dollar could drop on the short-term.

As for the week ahead, the main news event that is expected looks to be the Federal Funds Rate on Tuesday. The Federal Funds Rate is in fact the U.S. interest rates announcement for the next month. Current expectations are that the Fed will leave rates at their current low levels of less than 0.25%. However, if the Fed will surprise and hike rates, this has the potential to erase the Dollar’s losses from last week.

EUR – Greece Bailout Speculations to Boost the Euro

The Euro managed to erase some of its losses against the major currencies during last week’s trading. The Euro gained about 100 pips against the Dollar and the Pound, and rose close to 200 pips against the Yen, having the EUR/JPY reach above the 125.00 level.

The main reason for the Euro’s uptrend seems to be the speculations regarding the Greece rescue plan by the Euro-Zone. It is expected that the Euro-Zone finance ministers will agree on Monday on a mechanism for helping Greece financially. Such a plan, if will indeed be announced this week, has potential to boost the Euro further. Every publication of potential rescue plan has strengthened the Euro so far, and a final solution to the Greek debt crisis is likely to be received as a strong signal that the Euro-Zone has healthy economies that can aid Greece.

Looking ahead to this week, a batch of data is expected from the Euro-Zone. The main publication looks to be the German ZEW Economic Sentiment. This is a survey of about 350 German institutional investors and analysts that are asked to rate the next 6-month outlook for Germany. Traders should also keep close attention to any development regarding the Greece bailout plan. This seems to be the most urgent matter at the moment, and any publication on the subject is likely to create harsh volatility in the market.

JPY – The Yen Continues To Drop against the Majors

The Yen continued to drop against most of the major currencies during last week. The Yen saw a relatively peaceful session against the Dollar, yet it underwent a bearish trend vs. the Euro and the Pound.

Several economic publications from the Japanese economy have contributed to the Yen’s weakness during last week’s trading session. The Final Gross Domestic Product showed that value of all goods and services produced by the economy during the first quarter rose by merely 0.9%, failing to reach expectations for a 1.0% rise. In addition, the Core Machinery Orders, which measures the value of new private-sector purchase orders placed with manufacturers for machines, has dropped by 3.7% during January. Currently it seems that until a series of positive data will be published from the Japanese economy, the Yen might continue tumbling.

As for this week, the most interesting publication from the Japanese economy looks to be the Overnight Call Rate, which is in fact the Japanese interest rates announcement for the next month. Japan currently holds the lowest rates within the industrial world, and analysts have forecasted that the Bank of Japan (BoJ) is likely to leave rates at their current low levels. However, if the BoJ will surprise and hike rates, this is likely to boost the Yen.

Oil – Will Crude Oil Drop Below $80 a Barrel?

Crude oil saw a relatively bullish session during the beginning of last week, and reached a weekly high of $83.05 a barrel. However, close to the weekend, crude oil dropped significantly and is currently traded around $80.80 a barrel.

The decline of crude oil seems to be the result of the drop in the U.S. Consumer Sentiment survey from Friday. The survey fell from 73.6 points on February to 72.5 on March, renewing concerns about energy demand in the world’s largest oil consumer. If the following data from the U.S. economy will continue to disappoint, it seems that crude oil might drop below $80 a barrel.

Looking ahead to this week, traders are advised to follow the main publications from the U.S and the Euro-Zone. Special attention should be given to the U.S. Interest Rate announcement on Tuesday and the Crude Oil Inventories report on Wednesday, as these seem to be the news events that will impact crude oil the most this week.

Technical News

EUR/USD

The pair has been moving higher the past two weeks. However, this correction could be coming to an end and the bearish trend may resume. The recent price appreciation has failed to make a significant breach of the daily chart’s downward sloping trend line that began on December 3rd. The pair is currently being traded at the resistance level of 1.3790. Going short at a downward sloping trend line can be a great entry point into the market. A bearish cross has also formed on the Slow Stochastic Oscillator, providing another signal for a potential downward movement in the price.

GBP/USD

The Cable is showing signs for a continuation of the bearish trend. Currently the daily chart displays the Relative Strength Indicator floating in the oversold region, indicating the recent price appreciation may have gotten ahead of itself. It also appears that a bearish cross is forming on the chart’s Slow Stochastic Oscillator, indicating the potential for a downward price movement. Traders may want to be aggressive today by shorting the pair prior to the breakout and the continuation of the bearish trend.

USD/JPY

The daily chart shows very little technical resistance to the pair’s recent price rise. The 7-day Relative Strength Index has moved into the oversold level but is showing a sharp up trend, indicating the pair may have more momentum behind it to rise. The pair could continue to rise to its downward sloping trend line, close to the resistance level of 91.25. From there the pair could reverse direction and head lower in line with the long term downward trend.

USD/CHF

The sharp drop in the value of the cross may have gotten ahead of itself and could be due for a short term correction. The daily chart shows a bullish cross has formed on the pair’s Slow Stochastic Oscillator, indicating the potential for a rise in the price. The 7-day Relative Strength Index is also floating in the oversold zone, further strengthening the oversold theory. The price could correct today to the resistance level of 1.0645.

The Wild Card

Oil

Spot crude oil prices have fallen below the daily chart’s upward sloping trend line. The price move lower began at the resistance level of $83.05 and is approaching the 20-day moving average line of the Bollinger Bands. Forex and commodity traders may want to enter into the market with this downward momentum at their backs. An entry strategy may be to wait for the price to break the 20-day moving average line and go short, with a price target at the lower Bollinger Band line, near $78.50.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Riskier assets soared higher during the week as equities and petroleum surged forward and the dollar retraced.  The Euro, the Aussie dollar, the loonie and the pound all presented solid returns.

On Monday, the markets focused on economic news out of Asia.  A record rise in exports helped Japan’s current-account balance swing back to surplus in January, according to the government, adding to hopes that overseas demand will continue to support the nation’s economic recovery.  January’s current account surplus or Japan’s net earnings from international trade and investment, stood at ¥899.8 billion ($9.95 billion) compared with a ¥132.7 billion deficit a year earlier, according to the Finance Ministry. The result represents the 12^th straight month of surplus, while the rebound from the previous year ¥1.033 trillion is the largest since a ¥1.222 trillion recovery in March 1992.

Meanwhile, the nation’s bank lending in February, excluding that by Shinkin, or credit-union banks dropped 1.6% from a year earlier, according to the BOJ.  Bank lending fell for the third month in a row in February as businesses continued to shy away from making new investments.  The figure improved on a 1.7% fall in January, but still marks the third-straight month of decline. Weak lending from banks shows that Japan’s economic recovery lacks the necessary strength to prompt companies to borrow more capital to expand their operations.  Firms have also reduced their reliance on bank lending as improving financial market conditions make it easier for them to raise money through selling bonds or issuing stocks if needed.  The BOJ also said Japan’s money stock increased 2.7% on year in February, compared with a revised 3.0% rise in January. M2 includes cash currency in circulation and deposits held by the BOJ and other financial firms in Japan, excluding Japan Post Bank.

On Tuesday even as the equity markets continued to rally, market participants focused on the weakening UK economy.  The economic data in the UK does not paint a pretty picture. The RICS February house prices (with the main index falling to a much weaker than expected 17% from 31%) was very disappointing. The January trade balance data was also a disaster for UK bulls, with the main deficit widening to a much worse than expected £7.98bn (vs. -£7billion previously and vs. -£7bn expected) while the non-EU trade gap widened to -£3.8billion (from -£2.6billion). This was the worse trade performance since August 2008 and resulted from a 6.7% monthly drop in exports while imports were down 1.6%. The slump in exports is disappointing at a time of sterling weakness but one should not forget that the UK main trading partner (the euro zone) recovery is extremely sluggish and a weaker currency will do little in the near-term if external demand is very weak to start with. Coupled with the negative adverse effects that the poor weather recorded in Q1 will have on GDP growth, the highly disappointing trade figures underline a further drag on economic activity.

On Wednesday, market participants were happy to see better than expected US inventory news.  U.S. wholesalers’ inventories unexpectedly fell 0.2% in January, according to the Commerce Department, as surging demand pulled goods off shelves in the first month of the year.  Wall Street analysts had expected inventories to rise by 0.2% in January. The unexpected decline followed a downward revision in December’s inventory level showing December inventories contracted by 1.0%, rather than the 0.8% drop originally reported.  Sales by U.S. wholesalers in the first month of 2010 were up 1.3% to a seasonally adjusted $346.7 billion, the latest data showed. It was the tenth straight monthly increase in sales, according to the Commerce Department. Sales were particularly strong for cars and groceries.  The decline in inventories is good news for the U.S. economy. As inventories are reduced, they will need to be replaced which creates more employment. The amount of wholesale goods on hand relative to sales was 1.10 in January, a record low. The inventory-to-sales ratio measures how many months it would take for a firm to deplete its current inventory. The ratio in December was 1.12.

In Asia, China reported stronger export and import figures for February than expected, with the net result of a smaller than expected trade surplus.  In fact, February’s trade surplus of $7.6 billion is the smallest in a year and a bit more than half of the January surplus.  In terms of global imbalances, the US trade deficit and the Chinese trade surplus have been roughly halved as a percentage of GDP over the last couple of years.  In the US case, it seems largely cyclical and the growth differentials that we expected to close the output gap in the US before Europe and Japan will likely see the US trade deficit grow again, though from a lower base.  In China’s case, the possibility of a structural shift is greater, though too early to tell.  China’s exports rose 45.7% in February from the depressed year-ago levels. Yet this is more than twice the pace in January and may also have been distorted by the earlier lunar New Year.  Imports jumped almost 45%, better than the 39.7% expectations, but well off the mind-boggling 85.5% pace reported in January.

Furthermore, Japan’s economy may be benefiting from the revival in its neighboring Asian economies, but domestic demand remains very sluggish and deflationary forces continue.  February machinery orders were softer than expected at down 3.7% m/m (vs. +20.1% in December.) That put the yearly rate at -1.1% (vs. -0.6% expected). Machinery orders are a good proxy for business investment, so this disappointing January performance is not particularly promising for Q1GDP.

On Thursday, riskier assets continued to climb, help a quarterly Federal Reserve report that said U.S. households’ total net worth climbed 1.3% in the fourth quarter, to $54.18 trillion from the third quarter’s $53.49 trillion. For 2009 as a whole, net worth rose 5.4%. Household net worth is assets, such as home equity, minus liabilities, such as mortgage debt.  A large chunk of the increase in net worth came from a drop in household debt, as an increasing number of financially stretched consumers defaulted on mortgage and credit-card debts. While the defaults are painful for families and costly to banks and investors, economists say they are also speeding the financial rehabilitation necessary for a return to robust growth.

The buoyant state of China’s economy was in the limelight Thursday in Asia. China is not just an externally driven economy, the strong February retail sales captured a very strong consumer sector, with a yearly growth rate beating expectations, at 17.9% y/y. February industrial production also impressed, with a 20.7% yearly rate, beating expectations. However, it is the February CPI that has caught most headlines, with a yearly inflation rate firming to a stronger than expected 2.7%, up from 1.5% previously. The data highlights overheating economic conditions, with the Jan/Feb reserve requirement hikes not filtering through to the economy just yet.

In Japan, the economic environment is not all that rosy and the final Q4GDP was revised down, to 0.9% (from 1.0%), with the deflationary forces yet again in the limelight as the GDP deflator stood at -2.8% y/y.

On Friday there was a plethora of data in the US for the market to absorb.  Retail sales rose last month by 0.3%, according to the Commerce Department. With the Super Bowl early in the month, electronic store sales soared.  Economists surveyed had forecast a 0.3% decrease. January retail sales were adjusted downward, to a 0.1% increase from a previously reported 0.5% gain.  Excluding the car sector, all other retail sales rose 0.8%. Economists had forecast a 0.1% increase. Ex-auto sales in January rose 0.5%, revised from a previously estimated 0.6% gain.  Retail sales data are an important indicator of consumer spending. Consumer spending represents some 70% of demand in the U.S. economy.

Unfortunately, Business inventories were on the soft side.  Not only was the January reading flat, but the December series was revised to -0.3% from -0.2%.  January wholesale and factory inventories had previously been released so the new information Friday was largely the 0.1% decline in retail inventories.   Inventories added mightily to Q4 09 5.9% annualized GDP and some analysts dismiss the growth because of this phenomenon.  However, a large part of the contraction was also due to inventories.  The inventory cycle is still unfolding.  The large swing in Q4 still is about the pace of inventory liquidation. It is a gradual process that can be stretched out for the next couple of quarters at least.   As sales are increasing, the inventory to sales ratio is tightening.

Currencies:

In Japan, both the prime minister and the finance minister made a none-too-thinly veiled threat of foreign exchange intervention.  One investment house was quoted on the wires late
Thursday suggesting the odds of intervention stood at 47%.  The MOF is insistent on providing a deflationary fighting measure for the Yen.

The RBNZ left rates on hold (at 2.5%) and reiterated that rates would remain on hold until around mid-year but also signaled that the pace of tightening would be gradual.  Governor Bollard stated that rate hikes may be less than in previous cycles and that growth is likely to be subdued relative to past recoveries including the RBNZ’s forecast for 4.4% y/y growth.  Inflation is expected to remain within target and Bollard noted that financial conditions are tighter than the ODR would imply reinforcing his point that the ODR is likely to be hiked by less than in previous cycles.

Canada’s unemployment rate edged down 0.1 percent to 8.2 percent in February as 21,000 people started new jobs, Statistics Canada reported on Friday.  The agency said there were 60,000 new full-time jobs filled in February, but 39,000 part-time jobs were lost.  Analyst had expected an increase of 15,000 jobs and an unchanged unemployment rate at 8.3 percent.  The Canadian dollar is breaking through support and now could make a run at par.

Commodities:

Crude Oil edged higher this week, rallying a little more than a dollar per barrel driven by dollar weakness, a strong equity markets.  During the middle of the week, the Organization of Petroleum Exporting Countries predicted members will need to produce 28.94 million barrels a day to satisfy demand in 2010. OPEC projection is an increase of about 190,000 barrels a day more than last month’s projection.  “Even taking into account the uncertainty regarding demand for OPEC crude, current OPEC production is likely to exceed market needs,” the Vienna-based secretariat said in the report.

OPEC increased its forecast for worldwide oil consumption in 2010 by 120,000 barrels a day to 85.24 million barrels a day. That represents growth of 880,000 barrels a day from 2009, 80,000 barrels a day more than it forecast last month. Consumption growth is driven entirely by developing economies and will remain sensitive to the pace of global economic recovery, according to OPEC.

Daily Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

USDJPY’s bounce from 88.14 extended to as high as 91.08 last week. Further rally to test the resistance of the falling trend line from 93.75 (Jan 7 high) to 92.14 is expected later today, a clear break above the trend line resistance will target 92.00 area. Key support is located at 89.63, only fall below this level will indicate that the bounce from 88.14 has completed, then another fall towards 87.00 could be seen.

Daily Forex Reports

03/12/10 Higher-yielding currencies continued to rise this session following stronger-than-expected retails sales figures.

New York Financial Press

By Yan Petters – The USD/CHF pair is testing its first support level for today – at the 1.0640 price. As several technical indicators suggest that the pair is likely to drop today, trader should pay attention to the three significant support levels that might be expected today.

• The chart below is the 4-hours USD/CHF chart by ForexYard.
• The technical indicators used are the Bollinger Bands, the Slow Stochastic, the MACD/OsMA and the Relative Strength Index (RSI).
• The Slow Stochastic is located under the 20 line at the moment – indicating that the bearish momentum has more steam in it.
• The MACD continues with the bearish channel, further strengthening the notion that a drop is likely to be expected.
• The RSI has failed to reach above the ‘over-sold’ zone, which means that a bullish correction is not likely to take place soon.
• The USD/CHF pair is currently testing the 1.0640 level. If it will manage to breach this level, it has potential to reach to the 1.0600 level – and then to the 1.0500.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By CountingPips.com

U.S. Retail Sales rose more than unexpected in the month of February as consumer spending on retail goods edged higher following an increase in sales for January. Advance estimates of retail sales showed that sales increased by 0.3 percent to a total of $355.5 billion in February, according to the report by the U.S. Commerce Department released today. January’s retail sales data was revised lower to show an increase of 0.1 percent after the original report registered a 0.5 percent increase.

The February retail sales data was better than the market forecasts which were expecting retail sales to decline by approximately 0.2 percent. Increased retail sales data bodes well for the domestic economic recovery as consumer spending accounts for roughly two-thirds of economic activity in the U.S.

On an annual basis, February’s retail sales level was 3.9 percent higher than the February 2009 sales level following an annual increase of 4.1 percent in January.

Core retail sales, excluding automobile sales and parts, advanced by 0.8 percent in February after the revised data showed that core sales fell by 0.5 percent in January. The core sales data surpassed market forecasts which were expecting a rise of 0.3 percent. On an annual basis, core sales rose by 4.2 percent in February from the February 2009 level following an annual gain of 4.3 percent in January.

Contributing to the advancement in retail sales numbers for January was a 3.7 percent jump in electronics & appliance stores sales and a 2.5 percent increase in miscellaneous stores retailers. Food and beverage store sales gained by 1.3 percent while general merchandise store sales advanced by 1.0 percent.

Contributing negatively to the retail data was a decrease in motor vehicle & parts dealer sales by 2.0 percent in February while health & personal care stores sales declined by 0.7 percent.

Paper trading is only useful for the testing of your methodology.

By EWI Editorial Staff

This is an excerpt from Elliott Wave International’s free Club EWI resource, “What a Trader Really Needs to be Successful” — a classic Special Report by EWI’s president Robert Prechter.

… 3. Experience. Some people advocate “paper trading” as a learning tool. Paper trading is useful for the testing of methodology, but it is of no value in learning about trading. In fact, it can be detrimental, by imbuing the novice with a false sense of security in “knowing” that he has successfully paper traded the past six months, thus believing that the next six months with real money will be no different. In fact, nothing could be further from the truth. Why?

Because the markets are not merely an intellectual exercise. They are an emotional (and in extreme cases, even physical) one as well. If you buy a computer baseball game and become a hitting expert with the joystick while sitting quietly alone on the floor of your living room, you may conclude that you are one talented baseball player. Now let the Mean Green Giant reach in, pick you up, and place you in the batter’s box at the bottom of the ninth inning in the final game of the World Series with your team behind by one run, the third base coach flashing signals one after another, a fastball heading toward your face at 90 m.p.h., and sixty beer soaked fans in the front row screaming, “Yer a bum! Yer a bum!” Guess what? You feel different!

To put it mildly, you will find it impossible to approach your task with the same cool detachment you displayed in your living room. This new situation is real, it matters, it is physical, it is dangerous, other people are watching, and you are being bombarded with stimuli. This is what your life is like when you are actually speculating. You know it is real, you know it matters, you must physically place orders, you perform under the scrutiny of your broker or clients, your spouse and business acquaintances, and you must operate while thousands of conflicting messages are thrown at you from the financial media, the brokerage industry, analysts, and the market itself.

In short, you must conquer a host of problems, most of them related to battling powerful human emotions, in order to trade real money successfully. The School of Hard Knocks is the only school that will teach it to you, and the tuition is expensive.

There is only one shortcut to obtaining experience, and that is to find a mentor. Locate someone who has proved himself over the years to be a successful trader or investor, and go visit him. You will undoubtedly find that he is very friendly since his runaway ego of yesteryear, which undoubtedly got him involved in the markets in the first place, has long since been humbled. Observe not only what he does, but far more important, what he does not allow himself to do. This person does exist, but it is hard to find him. He will usually welcome the opportunity to tell you what he knows.

By Russell Glaser – The range trading that the EUR/USD has experienced over the past month may continue. The price is approaching a significant resistance level and the 4-hour chart is showing technical resistance building, hinting at potential drop in the price.

Below is the EUR/USD 4-hour chart. We can see the short term bullish trend that has developed recently as the pair has been consolidating between the price levels of 1.3535 and 1.3735. The price is approaching the resistance line of 1.3735. A break of this price level could propel the pair to its next resistance level at 1.3835.

However, the forex technical analysis of the EUR/USD shows technical resistance is building on the chart. The Stochastic Slow Oscillator shows a potential bullish cross has formed, indicating the possibility for the price to fall. The 7-day Relative Strength Indicator is also floating in the oversold region. This is a warning to traders that the pair may be overbought.

If the price fails to break the 1.3735 resistance level, we could see a reversal back down to the 1.3535 support line. From there the range trading and consolidation of the pair could continue.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Source: ForexYard

The Dollar remained lower against higher yielding currencies today, after mixed economic data published yesterday. Crude Oil prices remained mainly unchanged on concerns of Chinese monetary policy tightening which might dampen the country’s demand for commodities.

Economic News

USD – Dollar Down Slightly on Mixed U.S Data

The Dollar weakened slightly against the EUR yesterday after the release of mixed U.S. data and better than expected Chinese data. First time unemployment claims fell to a seasonally adjusted 462K, down from a revised 468K in the prior week; however, the result was higher than the expected 456K. Also released Thursday, the U.S. trade deficit shrank to $37.29 billion from $39.90 billion in December. Analysts had anticipated a slight increase.

The Dollar index which measures the U.S. unit against a trade-weighted basket of six major currencies rose to 80.542 after the data, up from 80.484 late Wednesday.

Looking ahead to today, traders are advised to follow the release of the Retail Sales at 13:30 GMT and the Prelim UoM Consumer Sentiment at 14:55 GMT. If the results are better than expected we might see a stronger Dollar going into next week.

EUR – Pound Gains on Higher Inflation Expectations

The EUR gained versus the Dollar on signs Greece’s deficit crisis has been contained. The EUR received a slight boost today from a better than expected Trade Deficit data. However, the EUR declined as investors learned the decline was due to a drop in both imports and exports. By late afternoon in New York, the EUR had strengthened to $1.3685 from $1.3651 late Wednesday and was at 123.88 Yen from 123.59 Yen.

The U.K. Pound strengthened versus the Dollar Thursday after the Bank of England’s quarterly inflation expectations survey showed the public expects annual inflation of 2.5%, up from 2.4% in the previous survey. The report helped boost the Pound slightly as it boosted investors’ expectations the BoE will start tightening monetary policy sooner that expected. The Pound pushed back above the $1.50 level to $1.5063 recently, up from $1.4964 late Wednesday.

While the major news today is expected from the U.S, investors should pay attention to the release of Euro-Zone Industrial Production data, due to be released at 10:00 GMT. Better than expected result may help strengthen the EUR further.

JPY – JPY Continues to Decline on Expectation of Further Monetary Easing

The Yen declined against 15 of its 16 major counterparts as U.S. stock gained and concerns over Greek debt eased, dampening demand for the safe heaven currency. The Yen is down ahead of the Bank of Japan’s Policy meeting next week on speculation the Bank of Japan will monetary easing steps as the world’s second-largest economy struggles with deflation. The Yen dropped to 124.09 per EUR from 123.82 in New York yesterday. Japan’s currency traded at 90.69 per dollar from 90.51.

OIL – Crude Remains Mainly Unchanged On Chinese, U.S data

Light, sweet crude for April delivery settled unchanged Thursday at $82.11 a barrel on the New York Mercantile Exchange and is currently trading at $80.20. Oil Prices remained stagnant as data from China showed higher than expected inflation, prompting expectation the country could start tightening monetary policy and raise interest rates; a move that might dampen it demand for commodities. China is the biggest driver of global Oil demand growth. Positive Oil data reports from China and the U.S this week had sent oil over $83 a barrel Wednesday.

Looking ahead to today, investors should keep an eye for U.S data, as continued improvement in U.S economic conditions will likely provide further support to Oil prices.

Technical News

EUR/USD

The pair has experienced a period of consolidation over the past three weeks, As such; the daily chart shows a triangle pattern has formed. The price has moved back up to the 1.3700 price level, approaching a significant downward sloping trend line that began on December 3rd. Traders may want to go short when the price arrives at the trend line. Selling near a downward sloping trend line is can be an excellent entry point into the market.

GBP/USD

The 4-hour chart presents a good selling opportunity. The price has failed to break the significant downward sloping trend line that began at the swing high on January 19th. The chart’s Slow Stochastic Oscillator shows a bearish cross has formed, indicating at a potential downward price movement. Aggressive traders may want to enter short now, while those that are more conservative may want to wait for 7-day RSI to breach below the 70 mark to provide further support of a downward price move.

USD/JPY

The recent upward correction the pair has made over the past 7 days may be coming to an end. The daily chart shows some technical resistance to the price move, so traders may want to begin to scale back any long positions they may have. The 7-day Relative Strength Indicator has breached below the 70 mark, indicating a sell signal. The price of the pair could rise until 91.25 and then reverse back down in the direction of the long term trend.

USD/CHF

The downward price trend for the pair is showing little technical resistance on the daily chart. The currency is trading well below the 10-day simple moving average and the 10-day Momentum indicator shows a steady downtrend. Traders may want to stay short on the pair until the support line of 1.0610.

The Wild Card

EUR/JPY

Yesterday the pair made a modest correction to the upward sloping price trend that began on February 25th. The price failed to breach this trend line, indicating the uptrend is still intact. The 7-day RSI has also maintained its rising trend line and continues to move higher. The pair could rise to its short term resistance level of 0.9150. Forex traders may want to be long on this pair as a breach of this price could propel the pair to its next resistance level of 0.9410.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Today the retail sales figure is due with investors eyeing a fall of -0.2% MoM. Although the figure expected is negative investors bet on a March rebound in sales as snow storms and harsh winter conditions are considered to be the factors behind the dented February sales. Since the credit crisis has erupted consumer spending once the main driver of growth for the US has remained rather subdued. However with the current stabilization of unemployment settling at 9.7% and the Nonfarm figure falling less than expected, investors hope consumer spending is on the rise and will return gradually to be the catalyst of growth in the US economy.

How is the figure expected to affect the FX market? Although a good retail sales figure is bullish for the US economy and bullish for the Dollar, the recent price action in the FX market where the risk currencies such as the Euro and the Sterling rebounded suggest risk appetite is resuming. In such a scenario a positive surprise in the figure could actually boost risk appetite and place additional bearish pressure on the Dollar. A worse than expected figure will not necessarily curb risk appetite as investors might attribute it to the harsh weather conditions.

Daily Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.