Forex Tips & Daily Analysis

Economical News

USD

The greenback neared an all time low yesterday against the EUR as the markets' expectation that the Fed will cut interest rates continued to diminish. In Fed Chairman Bernanke's speech in Berlin yesterday he did not make any direct comments regarding the Feds' future monetary policy but he did mention that the Fed will do whatever is necessary to prevent the credit problems from spilling over into the broader economy. The majority of investors believe that the Fed will cut the interest rate by at least 0.25 % on September 18 but a lot of doubt has crept in recently and this is putting the greenback under pressure. Normally a rise in a country's interest rate has a positive effect on its currency as it will boost foreign investment, however with the current subprime crisis in the US coupled with global liquidity problems only a rate cut by the Fed will significantly relieve these problems and once again spur investment. In other news yesterday, the US Trade Balance released at -59.2 B which was lower than the expected figure of -59.0 B. This gave further indication that the US economy is slowing and investors fear that if there is no intervention by the Fed to cut rates that the US economy will head towards a recession.

Today, there is no market moving news to be released from the US, so we may see the dollar find some much needed reprieve after slipping against the EUR for five straight days. However the USD bearish momentum is strong, as the effects of the global credit crisis are most pronounced in the US and this is could significantly slow the economy. So today the greenback may continue to extend its losses all across the board and it could even reach a new all time low against the EUR.

EUR

The EUR has performed well of late, forming steady uptrends against most of the majors. Yesterday was no different as the European currency maintained its bullish surge all across the board and on the back of Bernanke's speech; it began to target the 1.3850 level against the greenback. The EUR was also boosted by ECB President Trichet as he stated that the Eurozone credit losses were not large enough to weaken financial institutions. His comments reinforced the markets sentiment that the ECB still wants to raise rates and will do so if market conditions permit. The European central bank has been busy providing liquidity to the financial systems in order to prevent short-term interest rates from rising too fast and prompting a bigger credit crunch. However unlike the Fed that is considering rate cuts in order to ease the credit crisis, this is not an option for the ECB as the inflationary pressures in the Eurozone have not yet been put to bed. In Eurozone news yesterday the German WPI released at 0.5 % and the French Trade Balance released inline with expectations at -3.0 B. However these figures were not significant enough to cause any sharp movements in the EUR which was mainly affected yesterday by Bernanke's and Trichet's speeches.

Today we are expecting the Eurozone Industrial Production and the Labor Cost Index. However both these indicators are not considered significant enough to cause any major volatility in the EUR. With today being light on significant news the EUR bullish momentum may begin to lose some steam.

JPY

Yesterday, the JPY lost ground all across the board as the global equity markets recovered on expectations of a future rate cut by the Fed. This rise in global stocks spurred investors risk appetite and therefore carry trades were very quickly backed in the mix. It is currently difficult for investors to predict whether carry trades will be sustained as the full impact of the subprime crisis is still unclear and the equity markets have been whipsaw trading ever since. However, it was not all doom and gloom for the JPY yesterday as Core Machinery Orders released at 17.0 %, far- beating the expected figure of 5.2 %. This was a strong indication that the Japanese manufacturing industry is in an expansion phase.

Earlier today, in the Asian trading session, the Japanese Current Account released at 1.75 T, well below the expected figure of 1.90 T. On the other hand there was some positive news for the Japanese economy as the Corporate Goods Price Index came in at 1.9 %, beating the expected figure of 1.7 %. However none of these indicators had much of an impact on the JPY whose direction is being ruled by carry trades. If stocks rally in the US and European trading sessions later on today then the JPY slip some more even though in the Asian trading it did manage to pull back some lost ground.

Technical Analysis

EUR/USD

Today, the 4 Hour chart implies on a possible recovery of the USD when both RSI (78) and Slow Stochastic (crossed at 82) are clearly in overbought territory.

The 4 Doji bars imply on an upcoming move and it appears that going long might be preferable.

GBP/USD

The key level of 2.0330 was breached today as the pair now consolidates around 2.0350 with clear intentions to keep going. The daily chart is bullish as the hourlies are slightly overbought which indicate that buying on dips might be preferable.

USD/JPY

After a three day correction up, the pair is showing a bearish formation again. The slow stochastic and the RSI are both showing strong bearish momentum. The next target price should be around 113.00.

USD/CHF

The pair is heading down and is now at 1.1850. The next key level is 1.1820 which would the lowest it has been since May 2005. If a breach through that level will occur we might see a much bigger move been validated. If the pair will be shy of a breach it will constitute a great entry point for a long position.

Wild Card

Crude Oil

Oil is consolidating at 78.20 after it has been going up for more than three weeks from 68.50. the slow stochastic on the daily chart is showing a strong bearish cross, and together with inability of the oil to breach through the strong resistance it delivers a great opportunity for Forex traders to go short at a great entry point.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.3940	2.0420	114.75	1.1950	0.8425	0.6900
	1.3920	2.0400	114.55	1.1925	0.8405	0.6880
	1.3895	2.0375	114.30	1.1890	0.8380	0.6850
Support	1.3830	2.0305	113.60	1.1830	0.8320	0.6790
	1.3805	2.0280	113.45	1.1815	0.8300	0.6765
	1.3790	2.0260	113.25	1.1800	0.8280	0.6645

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
12/09/2007	8:30a	GBP	Average Earnings Index + Bonus		3.3%	3.4%
12/09/2007	8:30a	GBP	Claimant Count Change		-8.5K	-8.0K
12/09/2007	9:00p	NZD	Interest Rate Statement		8.25%	8.25%
12/09/2007	10:45	NZD	Retail Sales m/m		-0.4%
12/09/2007	10:45	NZD	Core Retail Sales m/m		-0.5%
12/09/2007	11:01	GBP	RICS House Price Balance		12.6%	10.0%