The Sub-Prime Issue is Pulling the Greenback Further Down.
Economical News
USD
Last week, we saw the Greenback deterioration continue, as it ignored every piece of positive information that came from the US market, and it looks as if the sub-prime crisis is stronger than everything else in regards to USD strength.
Bernanke's speech last week about the economy in general and the inflation in specific, also didn't shed positive light on the near future of the US economy, implying that there will be no rate hike any time soon.
The following week will not be very full of important information, but with the sub-prime situation, the release of the Existing Home sales and New Home Sales will be much more important than usual, as this of information has much more importance now. The US Durable Goods is expected on Thursday, and the US GDP will be released on Friday. If the Existing Home sales will show a positive figure than we might see a certain improvement in traders' attitudes towards the greenback, as we know that the housing market is currently the key element in the US economy, and that the USD strength is not reflected correctly, as the Dow Johns is floating at record levels, and the US Stock market is quite strong. If we will see an average and moderate figure, than the GDP and Durable goods will have much less significance in regards to the USD downtrend, and will probably not be able to stop the negative sentiment.
EUR
The European market is consistently showing its strength, with the EUR and GBP trading at record levels against the USD and is not showing sign of a stop for now. The big question now remains when and if the 1.40 barrier will be breached for the EUR/USD?
The answer is actually dependant on the US market much more than it is on the European one, as the situation derives from the US market. We must not ignore the ever improving UK market, and the high UK interest rate that contributes to a very strong GBP that is now trading at 26 years highs.
This week will be relatively light on news, as the most important releases will be the German IFO, and the Euro-Zone PMI. Today, no releases are expected both from Europe and from the US, which will probably produce a relatively quiet trading day on the sector.
JPY
The JPY advanced to its highest level in more than six weeks against the USD as a slide in Asian stocks and the problematic US housing market encouraged traders to scale back investments in emerging markets funded by borrowing in Japan.
The currency also rebounded from a record low against the Euro after Asian shares followed a decline in U.S. equities on concern of mortgage defaults which may cause investors to continue to flee riskier assets.
With the sub-prime loan problem in the U.S. getting worst, the JPY's weakening trend has reached its end.
Technical Analysis
EUR/USD
The pair is heading to 1.3850 which is a major resistance level and if breached will initiate a further move which will set fresh all time highs. The daily charts are very bullish, as the hourlies are overbought. Looking for dips to go long might be preferable.
GBP/USD
With the pair trading at record highs, and the positive momentum leaning mostly on the positive side, it appears that the pair is steadily heading to 2.0800 levels maybe even this week. The daily charts are bullish and the hourlies are neutral which means that traders must look for a better entry point, as a correction might be imminent before the next move up becomes valid.
USD/JPY
After a choppy week, the pair approaches 120.75 which is a very strong support level that the pair has not seen since May. If the support will be breached we will see the beginning of a massive move down. The bias is definitely down as the dailies are bearish, and the hourlies are a bit oversold. Waiting for the hourlies to unwind before going short might be a smart move.
USD/CHF
After a nose dive move from 1.2460, the pair seems to be struggling to break the 1.1960 level. These levels have not been seen since November 2006. The daily chart provides a moderate bearish signal, and the hourlies provide mixed signals. There is no definite bias at this point.
Wild Card
NZD/USD
After breaking the unbelievable level of 0.8000, and showing nothing but consistent bullish sentiment, there is a great opportunity for Forex traders to jump in one of the healthiest up-trends around. It looks as if there is plenty more room to run, and even with a tight stop trading style, it is possible to take nice profits from a long position.
Market Trend
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
|---|---|---|---|---|---|---|
| Daily Trend |  |
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| Weekly Trend | |
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| Resistance | 1.3510 | 1.9945 | 124.14 | 1.2514 | 0.8534 | 0.6843 |
| 1.3476 | 1.9899 | 123.78 | 1.2495 | 0.8500 | 0.6810 | |
| 1.3400 | 1.9849 | 123.50 | 1.2423 | 0.8478 | 0.6767 | |
| Support | 1.3315 | 1.9779 | 122.99 | 1.2360 | 0.8400 | 0.6700 |
| 1.3265 | 1.9753 | 122.50 | 1.2312 | 0.8367 | 0.6682 | |
| 1.3240 | 1.9625 | 122.23 | 1.2289 | 0.8334 | 0.6653 |
Indicators
| Date | Time GMT | $€£¥ | Event | Period | Prev. | Forecast | Imp |
|---|---|---|---|---|---|---|---|
| No news releases today |  |