Forex Tips & Daily Analysis

Economical News

USD

The US dollar continued to trade on a slippery slope and it got even weaker since the Fed cut the interest rates by a larger-than-expected half percentage point last week. Regarding yesterday's trading day it lost some ground against the Japanese Yen and reached a record low against the EUR on the basis of different assumptions whether the Federal Reserve will decide to cut borrowing costs for a second time this year, a fact which probably will make U.S. assets less "eye-catching" and which could place the US economy in even a more fragile state.

Yesterday the New Home Sales index was published and we noticed a significant drop from last July when 870,000 were reported, in relation to this month where sales rapidity was very sluggish and only 793,000 were reported, New-homes sales dropped in August to the lowest level in seven years. Total existing homes sales fell 4.3 percent in August to an annual rate of 5.5 million units from July. The new-homes sales report, combined with other up to date economic reports showed a sharp drop in demand in August, suggesting that the economy is losing momentum as it heading into the fall.

Also yesterday the Unemployment Claims index was published and on the basis of these results the greenback recovered to some extent. Fewer people signed up for unemployment benefits last week, this fact is a little bit encouraging due to the recent weakness in the US labor market. Jobless claims fell 15,000 to 298,000 in the week ended Sept. 22 -- the lowest level since May.

Due to these facts there have been lately many warning signs of a weakening US economy and many investors and traders still believe that the bearish trend of the USD should continue for a while.

EUR

Yesterday the EUR rose to an all time peak reaching the 1.4189 level against the greenback on the back of the weak US new homes sales figures. In Eurozone news yesterday the German Unemployment rate fell slightly to 8.8 % and the German CPI released at 0.2 % beating the expected figure of 0.0 %. On the back of these positive economic figures ECB President Trichet reiterated that although the strong European currency is not necessarily in the ECB's best interests, it should not cause any major concerns for the European economy. The strong EUR has made it increasingly harder for European exporters to compete on the global market but the ECB is still maintaining a hawkish stance. The ECB was once again dipping into the financial markets yesterday as it lent 3.9 billion EUR at its penalty rate, the most in almost three years, suggesting credit markets are still unable to meet banks' borrowing needs. Also the three-month London inter-bank offered rate (LIBOR) for EUR rose to 4.79 percent yesterday, a six-year high, from 4.73 percent. So with current situation of lack of liquidity and money market problems we do not expect the ECB to change the interest rate in the near future as this could only lead to further instability. However with the greenback coming under fire in the last few weeks we feel that there is still room for the EUR to reach new heights.

JPY

The Japanese yen climbed today to 114.90 per dollar from 115.61 before the reports and indexes were published earlier this morning in Tokyo, Indexes such as: CPI, Overall Household Spending, Manufacturing PMI, Unemployment Rate, Industrial Production, and Retail Sales.

Industrial production rose 3.4 percent in August from a month earlier, higher than the median estimate for a 3 percent gain. Japan's industrial output has reached the fastest pace in almost four years

Consumer prices fell by 0.1 percent in August from last year, a seventh monthly drop, as retailers engrossed higher costs to attract customers.

Retail sales rose for the first time in three months especially in the clothing and auto sectors. Sales climbed by 0.5 percent in August from a last years figure and the purchase of passenger vehicles rose for the first time in 26 months in August.

As it seems at the moment by many Investors and traders, Japan's policy makers and Japan's economy are going along hand- in- hand, and as it is expected by the different major banks this trend will just keep getting stronger and we can expect to see the JPY trading at 112 against the US dollar for the mid-term, and even to see Japan's key interest rate rise in the next meeting of the BOJ on Oct 11.

Technical Analysis

EUR/USD

The 4 H chart indicates that there is still room for this pair to reach new heights. Both the RSI and momentum are positive indicating that this pair should continue its bullish rampage. However the dailies indicate that we are in overbought territory, so it may be a good time to begin pairing off some of those long positions.

GBP/USD

Both the hourlies and the dailies support a bearish signal. Bollinger bands are widened indicating increased volatility. This pair is still in a tight bearish channel which is evident from the 4 H chart and traders should wait for a breakout before going short.

USD/JPY

On the 4H the RSI is breaking the 60 mark and is indicating that this pairs bearish run has still got some steam. The daily chart is also bearish and as soon as this pair breaks the 115.00 level we should see it make a sharper move down.

USD/CHF

This pair is now within touching distance of the 117.00 level, this point is the lowest this pair has been since May 2005, if a breach through this level will occur we might see sharper downward movement. However if it fails to breach then it will be an opportune time to enter a long position.

Wild Card

Gold

The gold has been on a steady uptrend for over a month now and this bullish momentum now seems to be leveling out. The 1H, 4H and the daily charts all support a bearish configuration. So this is a good time for Forex traders to grab the bull by the horns and enter a short position, as we are now reaching the summit of this bullish run.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.4165	2.0240	115.10	1.1762	0.8745	0.7045
	1.4145	2.0197	114.91	1.1740	0.8731	0.7021
	1.4125	2.0170	114.70	1.1720	0.8710	0.7000
Support	1.4080	2.0120	114.40	1.1664	0.8655	0.6980
	1.4070	2.0100	114.20	1.1645	0.8633	0.6965
	1.4050	2.0085	114.00	1.1629	0.8610	0.6956

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
27/09/2007	12:30	USD	GDP Annualized	q/q (r)	4%	3.9%
27/09/2007	12:30	USD	GDP Deflator Annualized	q/q (r)	2.7%	2.7%
27/09/2007	12:30	USD	Unemployment Claims	***	311K	315K
27/09/2007	2:00p	USD	New Home Sales	***	870K	825K
27/09/2007	5:00p	USD	Fed Chairman Bernanke Speaks	***	***	***
27/09/2007	10:45	NZD	GDP	q/q	1.0%	0.5%
27/09/2007	11:00	USD	Fed Governor Mishkin Speaks	***	***	***