Forex Tips & Daily Analysis

Economical News

USD

The greenback lost some significant ground against the majors last week and it reached an all time low against the EUR. The negative dollar sentiment was mainly driven by the recent weak jobs and housing figures which gave further indication that the US economy may be heading towards a recession. The Fed's hesitancy to lower the interest rate has put the greenback on a slippery slope and the subprime and credit crisis have cast a shadow over the US economy. The most significant news that is expected from the US Today is the Empire State Business Conditions Index and it measures the general business conditions of manufacturers in the New York State. It is forecasted to release at 18.0, which is well below the previous figure of 25.0. If the figure will be released inline or below expectations, it will reaffirm the fact that the US economy is slowing down. With many investors already believing that the US economy is heading towards a recession it is likely that we may see this figure surprise on the downside. If this occurs then the greenback could experience some sharp bearish movement but it is more likely that it will range trade today as a result of investor caution.

Looking ahead to the rest of the week all the market's attention will mainly focus on Tuesday's interest rate decision and statement by the Fed which is expected to lower the interest rate by 25 basis points coupled with a dovish statement that will follow the interest rate announcement. The Fed Statement will play a key role in determining the markets sentiment with regards to future interest rate expectations, while the rate cut should have an immediate impact on the market and provide the dollar with some respite particularly if the Fed springs a very rare surprise and drops the interest rate by 0.50 %. The other significant US data that investors will watch this week is the consumer inflation, US housing starts and the Philadelphia Fed Index.

EUR

The EUR performed solidly last week all across the board and it surged to a new all time high against the greenback. However the bullish EUR will begin to experience a slowdown in momentum, as due to inflationary pressures and the spreading credit crisis in the Eurozone, the ECB is unlikely to raise the interest rates before the end of the year. Although Trichet and the ECB still seem to have a hawkish stance with regards to its imminent monetary policy, the market sentiment has shifted and it will place the EUR under pressure in the near future particularly if more cracks in the usually resilient European economy begin to appear.

Today the only news to be released out of the Eurozone will be the Trade Balance which is expected to come in at 4.0 B, well below the previous figure 5.2 B. The expected drop in the European Trade Balance may be partly attributed to the strong EUR and fledgling greenback, as it is making it harder for European exporters to compete in the global markets. However this news will not cause any volatility in the EUR and it should range trade today as investors will exercise caution ahead of Tuesday's US Interest Rate Announcement. In addition the German ZEW report is due to be released on Tuesday and it is also likely to cause volatility in the EUR.

JPY

Early last week the JPY went on a bullish rampage on the back of the sharp rebound of US equity markets but since then it has been on a gradual decline. There were strong indications in the beginning of the week that we could see a sustained carry trade unwind but with the volatility of US stocks it is still too early to predict whether we will see continued risk aversion particularly with the Fed's interest rate decision on the horizon. There was no significant news released from Japan in the Asian trading session today and looking ahead to later in the week, the Bank of Japan will announce its interest rate decision on Wednesday. The current market sentiment is that the Japanese interest rate will remain unchanged at 0.50 %, therefore traders will pay close attention to BoJ Governor Fukui's comments for hints to Japan's future monetary policy. The JPY could rise to new heights if the US Federal Reserve fails to cool the market on Tuesday and risk aversion may stay as a priority among investors.

Technical Analysis

EUR/USD

The pair is trading at an all time high and is now in a tight range. It appears to have some more momentum up as supported by the 4 Hour chart. The RSI and slow stochastic are floating at the 40 level, and are showing more room to run on the hourly level. The daily chart is showing a bearish cross on the slow stochastic which indicates that a correction down is close.

GBP/USD

The cable lost ground last week and is now trading at 2.0060. The hourlies are showing that the bearish momentum is slowing down and the bearish cross on the daily slow stochastic is supporting the bullish notion. The next target price might be around 2.0120.

USD/JPY

The pair is trading at 115.40 which is the 23.6% Fibonacci level of the 124.00/112.60 move. A breach up through that level will validate the move up at least up to the 38.3% level which is 117.00. All oscillators support the bullish notion.

USD/CHF

After several failed attempts to break through the very important support of 1.1800 last week, the pair is showing positive momentum on the daily studies. The slow stochastic and RSI are showing strong positive momentum which indicates that the next target price might be 1.1930.

Wild Card

Crude Oil

The bottom barrier of the 4 Hour channel has been breached which indicates that a bearish correction move is imminent. The slow stochastic is showing a strong bearish cross which might pull the Oil back to the 77.00 levels again. This is a great opportunity to Forex traders to make profit from a strong correction move.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.3940	2.0170	116.00	1.1950	0.8510	0.6980
	1.3920	2.0140	115.85	1.1925	0.8492	0.6965
	1.3898	2.0110	115.70	1.1910	0.8470	0.6950
Support	1.3830	2.0010	115.00	1.1830	0.8390	0.6890
	1.3805	1.9990	114.87	1.1815	0.8372	0.6870
	1.3790	1.9965	114.62	1.1800	0.8355	0.6855

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
17/09/2007	12:30	USD	Empire State Business Conditions Index		25.1	18.0
17/09/2007	12:30	CAD	Foreign Securities Purchases		-4.52B	-1.50B
17/09/2007	15:00	CHF	SNB Chairman Roth Speaks
17/09/2007	23:50	JPY	Tertiary Industry Activity Index	m/m	0.1%	-0.4%