Will Dollar Sidelined But Should See Additional Losses Today.
Economical News
USD
The USD continued it's weakening trend which was established in the last several days. The market is still trying to bounce back from the big Chinese fall out two days ago, and the flow of negative US news.
The Chicago PMI came in at 47.9, expectations stood at 50, and the previous reading was 48.8 a further contraction of business activity in the Midwest. Furthermore, economic growth in the form of the GDP (Q4, 2nd release) dropped from the previous 3.5% to 2.2%. New home sales also came in softer, falling by 16.6%.
Federal Reserve Chairman Ben Bernanke confirmed his positive outlook on economic growth and indicated that the latest move in stock prices will not alter the Fed's plans for monetary policy. Yet, the real concerns about the US economy still remain.
As for today, there are several major news events expected from the US markets, starting with Personal Income (13:30 GMT) that previously came in at 0.5% and is widely expected to come in at 0.3%. Next is today's biggest star in the form of the ISM manufacturing index (15:00 GMT), that is expected to come in at a flat 50.0, after a 48.8 last month, indicating that expansion in that section is standing still.
Construction Spending will sum up today's US calendar, with expectation of an unchanged from last month at -0.4%.
As it appears on paper, the greenback will continue it's downtrend, as no positive figures are expected boost it up.
EUR
The German unemployment rate dropped a bit to 9.3%, although it was a small drop, unemployment has been consistently dropping in the last three months.
The Euro-Zone Consumer Confidence came in at -5 after -6 in the previous month. The European CPI revision dropped to -0.5% after previously coming in at -0.4%, was right in line with expectations while core prices increased by a disapointing 1.7 percent. The stronger data continues to support higher rates in March, which is further confirmed by this morning's comments from central bank officials.
Today, the market will be expecting the Manufacturing PMI from England, Germany, And the Euro-Zone, as all are expected to come in slightly stronger than the previous month, and might cause a minor price movement early in the European morning.
JPY
Yesterday, the massive JPY rally calmed down a bit and continued with a slower pace, after appreciating more than 2% all across the board. This came in contrast to economic data which indicates that the country is struggling to recover from crisis. Even though industrial production fell less than expected, the annualized pace of retail sales growth failed to increase while the manufacturing sector PMI dropped from 53.4 to 53 in January. Looking ahead, the fiscal year end could continue to tip the scales in favor of the Japanese Yen. The future of the currency regarding further use as a main carry trade tool remains unclear.
Technical Analysis
EUR/USD
The German unemployment rate dropped a bit to 9.3%, although it was a small drop, the unemployment has been consistently dropping in the last three months.
The Euro-Zone Consumer Confidence came in at -5 after coming in at -6 in the previous month. The European CPI revision dropped to -0.5% after previously coming in at -0.4%, was right in line with expectations while core prices increased by a less than expected 1.7 percent. The stronger data continues to support higher rates in March, which is further confirmed by this morning's comments from central bank officials.
Today, the market will be expecting the Manufacturing PMI from GBP, Germany, And the Euro-Zone, as all are expected to come in slightly stronger than the previous month, and might cause a minor price movement early in the European morning.
JPY
The massive JPY rally calmed down a bit, and continued with a slower pace, yesterday after appreciating more than 2% all across the board. This came in contrast to economic data which indicates that the country is struggling to recover the prior crisis. Even though industrial production fell less than expected, the annualized pace of retail sales growth failed to increase while manufacturing sector PMI dropped from 53.4 to 53 in January. Looking ahead, the fiscal year end could continue to tip the scales in favor of the Japanese Yen. The future of the Currency regarding further use as a main carry trade tool remains unclear.
EUR/USD -
This pair is trying to reach the next resistance level at 1.2880, however a slight bearish reversal has been noticed on the 4 hour charts where slow stochastic is crossing above 80 and RSI is neutral at 60. In the longer term view we can notice the moving average (50) still below the 20 and the 10 period moving average and thus offer more room for another upward bullish trend.
GBP/USD
This pair has been trading in a tight range with strong support at 1.9450 and resistance at 1.9650. Indicators show a slight reversal from yesterday's high (1.9630) and a return to the lower band of the range. Volatility is low and slow stochastic is facing downwards just below 80 supporting this range.
USD/JPY
The key support level 119.00 broke two days ago and changed the overall bullish behavior of this pair to a bearish one, next support is at 117.50 while a break of that level will drive the price further down to new 3 months low.
USD/CHF
Daily indicators show an upward reversal where slow stochastic is curving upwards below 20 and RSI is also curving upwards at 20, however the longer term trend suggests that the bears still haven't said their last word and will try to test the next support level at 1.2100 in the following bearish wave.
Wild Card
CHF/JPY
This Forex pair has a heavy support at 2.7600 daily indicators offer more room for an uptrend as slow stochastic is at 60 RSI at 40 and momentum is at 98.6901.
The bullish reversal has not ended and there is still good opportunely for some gains for a buy position.
Market Trend
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
|---|---|---|---|---|---|---|
| Daily Trend |  |
|
 |
|
|
|
| Weekly Trend | |
|
|
|
|
|
| Resistance | 1.3311 | 1.9805 | 120.05 | 1.2375 | 0.7979 | 0.6812 |
| 1.3285 | 1.9765 | 119.10 | 1.2305 | 0.7955 | 0.6777 | |
| 1.3251 | 1.9680 | 118.65 | 1.2250 | 0.7905 | 0.6756 | |
| Support | 1.3180 | 1.9570 | 117.50 | 1.2113 | 0.7821 | 0.6705 |
| 1.3115 | 1.9500 | 116.85 | 1.2075 | 0.7785 | 0.6673 | |
| 1.3080 | 1.9460 | 116.02 | 1.2005 | 0.7721 | 0.6621 |
Indicators
| Date | Time GMT | $€£¥ | Event | Period | Prev. | Forecast | Imp |
|---|---|---|---|---|---|---|---|
| 01/03/2007 | 09:00 | EUR | Euro Zone Purchasing Managers' Index Manufacturing | FEB | 55.5 | 55.7 |  |
| 01/03/2007 | 13:30 | US | Personal Income | JAN | 0.5% | 0.3% | |
| 01/03/2007 | 13:30 | US | Personal Spending | JAN | 0.7% | 0.4% | |
| 01/03/2007 | 13:30 | US | Personal Consumption Expenditure Core (MoM) | JAN | 0.1% | 0.2% | |
| 01/03/2007 | 15:00 | US | ISM Manufacturing | 49.3 | 50.0 |  | |
| 01/03/2007 | 15:00 | US | Core PCE Price Index | M/M | 0.1% | 0.2% | |