Forex Tips & Daily Analysis

Economical News

USD

After brief hope that was generated due to a small correction, the Greenback continues the path we are so used to see it in. The last two days were quite negative for the greenback with regards to the plummeting US housing market, and the ongoing Sub-prime rate issue. Existing Home Sales was released lower than expected at 5.75M demonstrating that the crisis has not yet been resolved. To add some steam into the boiling situation, the New Home Sales was also released at a much lower than expected figure of 834K. The Durable Goods release closed the negative news releases with 1.4 %, and with a core figure that was much lower than expected and dived from 0.5 % on a previous release into negative territory at -0.5%. The most important news release expected from the US market would be the GDP Annualized that is expected to rise from 0.7 % to 3.2 % in contrast to the GDP Deflator that is expected to go down a bit from 4.2 % to 3.4 %. The general sentiment around the USD is quite negative, as traders find it hard to support the greenback with no significant signals that the housing market situation would get slightly better. If the GDP figure will come out strong it might shed some positive energy on the USD, but it would probably be implemented as a local correction before resuming on its normal course. The nose dive of the Dow Jones of more than 300 points contributes to the already sizzling negative sentiment around the USD. Hopefully next week will generate a clearer picture as many key releases are expected to come from the US market, especially the most important Change in Nonfarm Payrolls.

EUR

The Euro-Zone is consistently proving its strength with a solid monetary policy and a very strong currency. Although USD bearishness was seen all a cross the board, the EUR seemed to be reacting with a certain indifference to the choppy price action. The most important information that came from Europe yesterday was the German IFO which came more or less inline with expectations and caused no significant effect. The M3 Money Supply which measures the value of all currency and liquid cash assets held by the public was released at 10.9%, which indicates the high levels of inflation might be a problem to European economy, yet a reaction from the ECB officials will not be seen soon due to many upcoming holidays. As for today the Swiss Leading Index is expected be released, it demonstrates the future prospects of the Swiss economy, which is growing slowly and steadily. Most of the focus today will be concentrated on the US market with the GDP figure on tap.

JPY

The JPY continued to gain ground yesterday particularly verses the greenback as carry trades continued to unwind with a fresh bout of risk aversion emerging from worldwide concerns with hedge fund losses. Carry trades have been the primary factor responsible for the JPY weakening in the last few months, so now an unwind is the main driver of the recent JPY rally. Earlier today in the Asian trading session there was an important string of economic data releases from the Japanese markets. The Japanese Core CPI, the Tokyo CPI and the Core Tokyo CPI all released inline with expectations at -0.1 %. The Core figures, which exclude volatile food and energy items, are unchanged from last month indicating to the market that although we are not seeing inflation occurring in the Japanese economy just yet at least there is no deflation and therefore the market interpreted these figures positively. Also this news was followed by the Japanese Retail Sales figure that released in negative territory at -0.4 %, which was well below the forecasted figure of 0.5 %. However the negative Retail Sales figure could not hold down the JPY rally as the carry trade unwind is dominating the direction of the JPY. With carry trades no longer the name of the game we should see the JPY finish the week on a strong note.

Technical Analysis

EUR/USD

After the significant move down from 1.3850, the pair seems to be ignoring the ongoing USD weakness and is trading on a 60 pip range. The daily chart is very bullish and the hourlies are quite neutral. If the 1.3700 barrier will be breached than we might see the bearish correction continue, but as it appears to be, 1.3815 is the next target price.

GBP/USD

The pair peaked at 2.0560 yesterday and than dropped to the 2.0420 levels. If the 2.0400 level will be breached violently, we might see a very long bearish move for the pair that has been going up nonstop since June. Looking for a good entry point to go short on a long run position, might be the preferable strategy at this point.

USD/JPY

The liquidation of the carry trades has taken the pair to a very strong drop, and it touched 118.00. It is now correcting back to the 119.20 levels, but the daily charts show that the continuation of the move is imminent. A break through the 118.00 will confirm the bearish move as a strong one and will probably take the pair to the 116.50 zone quite quickly.

USD/CHF

The pair seems to have a difficulty to break the 1.1960 level which is now establishing as a very strong support. The entire move up to 1.2150 has been corrected back, and the pair now consolidates on 1.2040. The daily and the hourly charts are giving mixed signals and it is preferable to keep out of the market, until a clearer picture is presented, or a key level is broken. Meanwhile range trading with tight stops would probably be a smart move

Wild Card

Crude Oil

After a sharp drop from the 77.00 level, the oil is regaining its momentum, and is now pushing up again. The slow stochastic is signaling that there is still room to run up. The relatively low level the oil is in right now provides Forex traders with a great opportunity to enter a very solid move up, with a target of 77.20 maybe before the end of today's trading session.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
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
07/27/2007	09:30	CHF	Leading Index	m/m	1.98	2.00
07/27/2007	12:30	USD	GDP Annualized	q/q	0.7%	3.2%
07/27/2007	12:30	USD	GDP Deflator Annualized	q/q	4.2%	3.4%
07/27/2007	12:30	CAD	Business Conditions Orders		12.0	4.0
07/27/2007	14:00	USD	Consumer Sentiment		92.4	91.5