Forex Tips & Daily Analysis

EUR and USD in Struggle for Dominance.

With the recent volatility in the forex market, one currency pair seems to stand out: the EUR/USD. This pair has been range-trading for the previous week as the two currencies struggle for dominance of the currency market. With this weekend's G8 summit on the global financial system, traders will no doubt anticipate a higher level of volatility among this primary currency pair after the world's economic leaders meet.

Economical News

USD

The Dollar advanced Wednesday against the EUR and JPY after an auction of 10-year U.S. Treasury notes achieved higher than expected yields. Selling off of stocks after the auction intensified the losses among risk-sensitive currencies. The USD fell earlier after Russia's central bank said it will diversify its currency reserves by cutting U.S. Treasury purchases and buying IMF-backed bonds.

The Dollar also fell 6.6% versus the EUR in May on speculation the ever expanding U.S. budget deficit and the Federal Reserve's increase of the money supply will undermine the greenback. The U.S. budget deficit climbed to $189.7 billion in May, a record for the month which prompted some concerns of the Dollar's collapse. In light of this, it appears that U.S. fiscal and monetary policy will provide indications on the outlook for the Dollar as markets currently associate an improving economic outlook with a possible tightening of monetary policy.

A Federal Reserve survey know as the "Beige Book" which was released Wednesday showed that economic conditions remain weak and even deteriorated in several regions of the country, with commercial real estate and labor markets continuing to struggle. Traders should pay close attention to Core Retail Sales and Unemployment Claims to be released today at 12:30 GMT for further insight in to the state of the U.S economy. The likelihood that the greenback will continue to rise against some of its main currency rivals appears stronger than usual today.

EUR

After a downward turn against the USD, the EUR rebounded from its session low of $1.3914 and trimmed its losses following a rise in the equity markets. Wednesday the EUR ended at $1.3987, down from $1.4075 late Tuesday and at 137.47 Yen, up from 137.10. The Pound Sterling was at $1.6355, up from $1.6333. The Pound advanced against the EUR to the highest level since December after a government report showed manufacturing in the U.K. expanded for a second consecutive month and stocks gained.

The EUR/USD pair seems to have settled into a trading range with the EUR fluctuating between $1.38 and $1.42. This trend is likely to continue until the end of the week. However, with high oil prices and diminishing risk aversion it is likely that the EUR will resume its bullish trend as the underlying sentiment is still negative for the Dollar.

With a slow news days for the Euro-Zone today and Friday, investors are waiting for the weekend G8 meeting to start this Friday for a better assessment of the direction the participating economies will take. The EUR's recent strength makes it a excellent forerunner in today's market, but regional uncertainties have captivated traders lately and made the forex market less predictable.

JPY

The JPY declined yesterday against most major currencies as speculation regarding a global recovery encouraged investors to buy higher yielding assets outside of Japan, selling the Japanese currency. The Yen was at 137.21 per EUR Wednesday and at 98.21 per USD, following a 0.8% drop. As the anxiety about financial turmoil retreats, people are willing to buy riskier currencies which offer higher yields while funding that with safer currencies such as the Yen and the Dollar.

The Japanese Yen is likely to continue to weaken as improving risk appetite brought on by advances in the Asian stock market is likely to encourage investors to turn to overseas assets offering higher returns, promoting Japanese capital outflows. As a result, the JPY's target rates today should be lower against its currency counterparts.

Technical Analysis

EUR/USD

The price of this pair has been sending mixed signals over the past few days as it continues to trade in a wide range. There appears to be a bearish cross on the hourly chart's Slow Stochastic; however, a fresh bullish cross has just occurred on the hourly chart's MACD. With bullish and bearish crosses on the MACDs of the 4-hour and daily charts, respectively, traders may find it difficult to choose a direction. Waiting for a clearer signal might be a wise choice today.

GBP/USD

The price of this pair appears to be floating in the over-bought territory on the RSI of the 4-hour chart, signaling an impending bearish move. The fresh bearish crosses on the hourly chart's Slow Stochastic and MACD support this notion. Going short appears to be a good strategy today.

USD/JPY

The oscillators on this pair have recently completed a number of bearish crosses, and have exited the over-bought territory on the RSIs. As of now, the price is on a slippery downward slope. However, indications on the hourly chart are beginning to show signs of opposing pressure as the downward movement may be coming to an end. If it breaches the next resistance line, a strong downward move may occur; however, if it fails to breach, traders may expect an upward correction throughout the day.

USD/CHF

The price of this pair appears to be floating in the over-sold territory on the 4-hour chart's RSI, indicating an imminent upward correction. The fresh bullish cross on the hourly chart's Slow Stochastic supports this notion. Going long might be a wise move today.

Wild Card

EUR/NOK

The price of this pair has just entered the over-sold territory on the hourly chart's RSI, signaling upward pressure. The fresh bullish crosses on the MACD of the hourly and 4-hour charts support the notion of an impending bullish correction. By entering early long positions, forex traders can enter the market on this pair, and at a great starting price.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.4180	1.6575	98.70	1.0850	0.8260	0.8660
	1.4130	1.6530	98.45	1.0820	0.8185	0.8620
	1.4070	1.6470	98.20	1.0785	0.8130	0.8575
Support	1.3995	1.6345	97.50	1.0725	0.8060	0.8520
	1.3930	1.6300	97.15	1.0695	0.8035	0.8495
	1.3875	1.6250	96.75	1.0645	0.7980	0.8450

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2009-06-11	01:00	AUD	MI Inflation Expectations		2.3%	-
		MI Inflation Expectations Measures the percentage change which consumers expect for the price of goods and services over the next year.
2009-06-11	01:30	AUD	Employment Change		27.3K	-30.0K
		Employment Change This report measures the number of jobs created during the previous month. It is one of the most important indicators of the economy's health since individual consumption makes up a significant portion of a country's GDP and has a direct correlation with employment.
2009-06-11	01:30	AUD	Unemployment Rate		5.4%	5.7%
		Unemployment Rate This figure represents the percentage of potential workers that are currently unemployed and actively seeking a job. This report is typically overlooked as its information is derived from previously released indicators.
2009-06-11	06:45	EUR	French Final Non-Farm Payrolls	q/q	-0.9%	-0.9%
		French Final Non-Farm Payrolls Measure the change in the number of employed people, excluding the farming industry and government
2009-06-11	08:00	EUR	ECB Monthly Bulletin		*	*
		ECB Monthly Bulletin This report reveals the data which was used by the ECB Governing Board when making the latest interest rate decision. It is released 1 week after the Minimum Bid Rate is announced.
2009-06-11	08:30	GBP	Consumer Inflation Expectations		2.1%	-
		Consumer Inflation Expectations This report measures the percentage change in inflation expected to be paid by private consumers over the next 12 months.
2009-06-11	09:00	GBP	CB Leading Index	m/m	-0.5%	-
		CB Leading Index This index measures consumer confidence based on a number of leading economic indicators. Its impact is usually very low as these indicators are released individually at another time.
2009-06-11	12:30	CAD	Capacity Utilization Rate		74.7%	71.6%
		Capacity Utilization Rate A measure of consumer inflation. When producers of goods approach full capacity they often hike prices in order to regain control of their market expectations and increase profits.
2009-06-11	12:30	USD	Retail Sales	m/m	-0.2%	0.4%
		Retail Sales This report is a measure of the change in the total value of retail sales. Positive figures indicate economic growth.
2009-06-11	12:30	USD	Unemployment Claims		625K	614K
		Unemployment Claims An indicator which measures the number of individuals who filed for unemployment insurance with the government for the first time during the past week. This is one of the earlier releases of economic data.
2009-06-11	12:30	USD	Core Retail Sales	m/m	-0.2%	0.2%
		Core Retail Sales This report is measuring the change in the total value of sales at the retail level, excluding automobiles. Traders should bear in mind that automobile sales account for about 20% of Retails Sales, however, they can also be very volatile, and thus distort the underlying trend. The Core data is therefore thought to be a better gauge of spending trends.
2009-06-11	14:00	USD	Business Inventories		-1.3%	-1.0%
		Business Inventories This figure measures the amount of inventory in stock at various businesses. As inventories become depleted, businesses are more likely to increase spending in the next business cycle.
2009-06-11	14:30	USD	Natural Gas Storage		124B	110B
		Natural Gas Storage This figure measures the change in the number of cubic feet of natural gas held in storage by this country from week to week. It has a moderate impact on the price of fuels, but provides mixed results for investors.
2009-06-11	17:05	USD	FOMC Member Lockhart Speaks		*	*
		FOMC Member Lockhart Speaks Federal Open Market Committee (FOMC) member Dennis Lockhart is due to speak today. As a leader of the central bank he can instantly influence the currency markets with his speeches and off hand remarks on the future of U.S. monetary policy.
2009-06-11	22:45	NZD	Retail Sales	m/m	-0.4%	0.2%
		Retail Sales This report is a measure of the change in the total value of retail sales. Positive figures indicate economic growth.
2009-06-11	22:45	NZD	NZD Core Retail Sales	m/m	0.5%	0.4%
		NZD Core Retail Sales Measures the change in the total value of sales at the retail level, excluding automobiles.
2009-06-11	22:45	NZD	FPI	m/m	-0.6%	-
		FPI The Food Price Index (FPI) measures the rate of inflation for food products and services. It provides a glimpse into the upcoming CPI figures to be released soon thereafter.
2009-06-11	23:01	GBP	BoE Quarterly Bulletin		*	*
		BoE Quarterly Bulletin The Bank of England (BoE) offers this report every quarter which includes commentary on recent market developments and monetary policy decisions, along with other economic research conducted throughout the term.