Forex Tips & Daily Analysis

Economical News

USD

Yesterday the Federal Open Market Committee released the Minutes from its March 21st meeting and although the Minutes say 'further policy firming might prove necessary,' uncertainties in growth and inflation make it nearly impossible to raise rates and most likely, in the best case, the Fed will leave rates unchanged at 5.25% for the next 6 months. The current situation will not support the USD against the GBP EUR and AUD whose central banks are expected to raise rates at least more once this year. This is a carry seeking world and for the time being, there are more attractive carry opportunities elsewhere.

Also the US monthly Budget Deficit increased from -85.3 billion to -96.3 billion marking a new record and much worse then expected. with U.S. growth slowing and the threat of a recession still not eradicated the budget deficit could grow into a mammoth problem over the coming years.

Looking ahead, we are only expecting jobless claims and import prices today which are not big market movers and the market expects a further decline of the USD in the near term.

EUR

Today's Interest rate decision is expected to leave rates unchanged at 3.75% however even more important is the speech of ECB President Trichet, who is expected to support a continuation of the hawkish behavior in the Euro- Zone and a further rise in the EUR interest rates in the near future. However, there is a possibility that the central bank President could also take a more dovish stance, due to the fact that the EUR/USD is trading less than 1% away from its all-time high. As an export dependent region, the Euro-zone is particularly sensitive to the value of the EUR.

Ongoing solid growth along with ample liquidity conditions in the Euro zone nevertheless pushed ECB rate hike expectations higher. The Euribor strip curve currently attaches a probability of 60% that rates will rise to 4.25% at the end of the year.

A repetition that the ECB will continue to 'very close monitor' all developments would signal that the ECB is still on track to hike rates in June to 4%. Markets will look for some hints how high rates may rise this cycle.

JPY

Yesterday the Japanese March Corporate Goods Price Index saw a rather surprising +0.3% rise MoM and 2.0% YoY. Forecasts had looked for numbers closer to +0.1% and +1.9% respectively. Of course the figures are driven by the oil prices which have begun to pick up from the sharp dip seen in January and this could well continue with oil prices rising again this month. Whether this fuels prices further is uncertain given the caution that business have over raising prices but the basis for the push is still there.

The weakness in the Yen over the past few weeks reflects the market's belief that the Bank of Japan will not stand in the way of carry trades.

Deflation is rearing its ugly head again as the latest consumer price figures from Tokyo report their first drop since May of 2006. This may be temporary, but even if it is, the central bank will find it difficult to justify a rate hike in an environment where inflation is falling and retail sales remains weak.

The JPY is expected to remain calm today - and might even regain some of the recent losses, due to a lack of economic data.

Technical Analysis

EUR/USD

Strong resistance has been noticed at 1.3466 and further up at 1.3500, however indicators are rather bearish when 4H RSI is at 79 facing downwards, momentum is at 100.79, and slow stochastic is at 82. A Range trading between 1.3420 and 1.3500 is more likely.

GBP/USD

When the mighty resistance 1.9800 was tested it seemed that an upcoming bearish trend was expected. A head and shoulders pattern is established and also a doji is observed on the 4 H chart and implying a signal of bearishness.

USD/JPY

We notice a channel on the hourlies charts which stands between 117.70 to 119.34 those boundaries were broken in the overnight session and now pointing at 119.45 ,this level

implies on bullish trend till 119.70 (Fibonacci) and then a reversal trend is expected which will test the 119.20 support level.

USD/CHF

This pair has come back up from yesterday's low of 1.2174 to 1.2207 earlier today and has been trading a tight range in the last 8 hours, daily slow stochastic is at 50 and RSI is at 57 with a neutral behavior.

Wild Card

NZD/USD

This forex forex pair has been in a tight channel of 0.7172 - 0.7296 and now the low barrier is to be tested since of a bearish head and shoulders pattern is observed on the 4H chart.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.3583	1.9915	120.87	1.2314	0.8400	0.6878
	1.3544	1.9860	120.00	1.2298	0.8356	0.6845
	1.3500	1.9820	119.47	1.2207	0.8272	0.6819
Support	1.3422	1.9750	119.01	1.2164	0.8240	0.6785
	1.3354	1.9697	118.60	1.2100	0.8185	0.6749
	1.3300	1.9645	117.83	1.2067	0.8154	0.6700

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
04/12/07	08:30	USD	import Price Index	m/m	0.75%	0.75%
04/12/07	08:30	USD	Unemployment Claims		321K	318K
04/12/07	08:30	EUR	ECB President Trichet Speaks
04/12/07	11:45	EUR	Interest Rate Statement		3.75%	3.75%