Forex Tips & Daily Analysis

High Volatility might Continue this Week.

After depreciating consistently over the past few weeks, the USD is now traded over 1.41 against the EUR, and over 1.62 against the GBP. This week on Thursday, at 11.45 GMT, the ECB will deliver its periodical Interest Rates statement. Forecasts show that the number is expected to stay at 1%. Such a decision could create strong volatility for the leading currencies, as many have expected the ECB to force movement in the EUR. Forex traders should prepare for what is shaping up to be a fool of opportunities' trading week.

Economical News

USD

Last week, the Dollar continued its bearish trend against all the major currencies, and the EUR/USD saw a six month high, as the pair was traded at the 1.4150 level.

Last weeks publications from the U.S economy were characterized with contradicting indications. While some showed that the public has retained its faith in the U.S economy, others have shown that it is still early to say that the crisis is behind us. And it appears that until sharp evident will sign the end of the crisis, the Dollar's bullishness could continue.

The main news from the U.S last week were the Consumer Confidence, which delivered a surprising positive result, providing the best figure in 8 months. However, the weekly Unemployment Claims remained above 600K for the 17 consecutive times. This number is simply overwhelming. In addition, the New Home Sales report, which is considered to be one of the most reliable indicators regarding the housing sector, showed a rather disappointing figure, as only 352K new single-family homes were sold during April.

As for the week ahead, a batch of data is expected from the U.S economy, and this could be a fantastic week for traders to enjoy the heavy volatility of the market in order to enlarge their profits. Special attention should be given to the Non-Farm Employment Change expected on Friday, as this indicator tends to have an immense impact on the leading currencies and on top of them the USD. Currently it seems that if the actual result will be similar to forecasts of 520K, a reverse of trends could take place by the weekend.

EUR

Last week, traders who went long on the EUR made some significant profits. The EUR saw rising trends against the USD, the GBP and the JPY, as its most impressive uptrend was against the Dollar.

The two main news events from the Euro-Zone last week came from the German economy. Germany holds the largest and strongest economy in the Euro-Zone, and thus the relevant publications from this economy usually have a hefty impact over the EUR.

On Monday, the German Business Climate report was published, and even though it failed to reach expectations, the result was still the best figure in 6 months, showing that businesses around Germany are starting to feel improvement in their current business conditions. Then on Thursday, the German Unemployment Change indicator showed that merely one thousand individuals have lost their jobs during April. This was the best figure in 6 months as well. The combination of the two surveys seems to be 1 of the main reasons that strengthened the EUR against the major currencies.

Looking ahead to this week, the most notable publication from the Euro-Zone will be the Minimum bid Rate, which is of course the European Interest Rates announcement. Currently, analysts suspect that the European Central Bank (ECB) will leave interest rates at 1.00%, however, in case that the ECB will decide to manipulate rates, this will sure have a high impact on the EUR.

JPY

During last week's trading session, the Yen saw mixed result against the leading currencies. Whilst the JPY depreciated against the EUR and the Pound, it saw rising trends against the USD.

The leading indicators which were published from the Japanese economy showed mixed signals that could explain the large volatility of the Yen. The Japanese Trade Balance, which measures the difference in value between imported and exported goods during April, delivered an unexpected negative figure, making it the ninth month in a raw on which Japan sees more importing activity than exporting. These figures are devastating for the Japanese economy, which is built on its export. On the other hand, The Preliminary Industrial Production showed an increase of 5.2% in April as opposed to March. This means that the Japanese consumers feel more secure in their economic condition, and this has the potential of pulling the country out of recession.

Ad for this week, traders should pay special attention to the Capital Spending report, scheduled for Wednesday. This report measures the change in the total value of new capital expenditures made by businesses, and is expected to show a 27.1 decrease in the last quarter. If the real result will be similar, a bearish trend for the JPY could take place.

Technical Analysis

EUR/USD

The bullish trend is loosing its steam and the pair seems to consolidate around the 1.4140 level. The daily chart's RSI is already floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

GBP/USD

The price of this pair appears to be floating in the overbought territory on the daily chart's RSI indicating a downward correction may be imminent. The downward direction on the 4-hour chart's Momentum oscillator also supports this notion. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

USD/JPY

The daily chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the 4-hour 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 hourly chart is showing mixed signals with its Slow Stochastic fluctuating at the neutral territory. However, a bullish cross forming on the 4-hour chart's Slow Stochastic implies that upwards correction might take place in the nearest time frame. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

Wild Card

Crude Oil

Crude Oil prices rose significantly in the last month and peaked at $67 per barrel. However, daily chart's RSI is floating in an overbought territory suggesting that a recent upwards trend is loosing 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.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.4220	1.6305	96.05	1.0770	0.8130	0.8790
	1.4200	1.6285	95.85	1.0750	0.8110	0.8770
	1.4170	1.6255	95.55	1.0720	0.8080	0.8740
Support	1.4110	1.6195	94.95	1.0660	0.8020	0.8680
	1.4080	1.6165	94.65	1.0630	0.7990	0.8650
	1.4060	1.6145	94.45	1.0610	0.7970	0.8630

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2009-06-01		EUR	French Bank Holiday		*	*
		French Bank Holiday French banks will be closed in observance of Armistice Day;
2009-06-01		EUR	German Bank Holiday		*	*
		German Bank Holiday German banks will be closed in observance of Christmas Eve.
2009-06-01	00:30	AUD	MI Inflation Gauge	m/m	0.0%	*
		MI Inflation Gauge Measures the price change of a fixed basket of goods. This indicator is very similar to the government's CPI report.
2009-06-01	01:02	AUD	HIA New Home Sales		3.1%	*
		HIA New Home Sales The percentage change in newly constructed homes sold in Australia. This is figure is released on a monthly basis.
2009-06-01	01:30	AUD	Retail Sales	m/m	2.2%	0.5%
		Retail Sales This report is a measure of the change in the total value of retail sales. Positive figures indicate economic growth.
2009-06-01	01:30	AUD	Company Operating Profits	q/q	-8.0%	-4.5%
		Company Operating Profits Measures the total amount of profits earned by businesses with more than 20 employees before taxes have been taken out.
2009-06-01	01:30	JPY	Average Cash Earnings	y/y	-3.9%	-4.2%
		Average Cash Earnings This report measures the monthly change in the amount of money paid to wage-holders.
2009-06-01	06:30	AUD	Commodity Prices	y/y	-15.0%	-23.3%
		Commodity Prices Commodities account for a very large portion of Australia's GDP. As such, commodity prices are a leading indicator of economic health.
2009-06-01	08:00	EUR	Final Manufacturing PMI		40.5	40.5
		Final Manufacturing PMI This indicator is the results from a survey of purchasing managers in the manufacturing industry used in order to gauge economic health from their perspective.
2009-06-01	08:30	GBP	Manufacturing PMI		42.9	44.1
		Manufacturing PMI The Manufacturing sector's Purchasing Manager's Index (PMI) is an indicator which measures how much activity the purchasing managers of the manufacturing sector in the economy are experiencing.
2009-06-01	12:30	CAD	GDP	m/m	-0.1%	-0.3%
		GDP A country's Gross Domestic Product (GDP) is a measure of the aggregate value of all goods and services produced by its economy. It is the most comprehensive report issued on a nation's economic health and therefore typically carries a significant impact on currencies.
2009-06-01	12:30	USD	RMPI	m/m	12.1%	6.2%
		RMPI The Raw Materials Price Index (RMPI) is a measure of the inflation rate on materials purchased by manufacturers.
2009-06-01	12:30	CAD	IPPI	m/m	0.3%	0.2%
		IPPI The Industrial Product Price Index (IPPI) is a measure of the inflation rate for goods as they leave the plant from which they were manufactured.
2009-06-01	12:30	USD	Core PCE Price Index	m/m	0.2%	0.2%
		Core PCE Price Index The Core Personal Consumption Expenditure's (PCE) Price Index is a measure of the inflation experienced by consumers when purchasing goods and services, except food and energy.
2009-06-01	12:30	USD	Personal Spending	m/m	-0.2%	-0.2%
		Personal Spending This is a report which measures the amount consumers spent on goods and services over the past month.
2009-06-01	12:30	USD	Personal Income	m/m	-0.3%	-0.2%
		Personal Income This report measures the income received by individuals. It is an accurate gauge of a country's gross earnings.
2009-06-01	14:00	USD	ISM Manufacturing PMI		40.1	42.2
		ISM Manufacturing PMI This is an index based on surveyed purchasing managers in the manufacturing industry. A number above 50 indicates an expansion in the manufacturing sector; below 50 signals a contraction. This index is a strong indicator of an economy's general health.
2009-06-01	14:00	USD	Construction Spending	m/m	0.3%	-1.7%
		Construction Spending This report provides a measure of the month-by-month change in the value of new construction projects.
2009-06-01	14:00	USD	ISM Manufacturing Prices		32.0	35.2
		ISM Manufacturing Prices The Institute of Supply Management's (ISM) Manufacturing Prices report measures the month-by-month inflation incurred by manufacturers when purchasing materials.
2009-06-01	23:50	JPY	Monetary Base	y/y	8.2%	8.0%
		Monetary Base This report measures yearly change in the amount of Japanese currency in circulation, including banknotes, coins, and current account balances. It has a direct correlation with Japanese inflation rates.