Forex Tips & Daily Analysis

Economical News

USD

Last Friday, the greenback continued gaining all across the board against the major currencies. The EUR/USD pair fell for the first time in six weeks below the psychological level of 1.5400, closing the trading session at the rate of 1.5380. The USD continued its bullish momentum mainly as a result of favorable economic data release during the day. By midday, the Employment data for April was released and gave traders many good reasons to buy dollars. With the figures released, the USD sharply gained 70pts against the EUR and 82pts against the JPY. As well the figures release assisted the greenback's recovery against the GBP, closing the Cable below the rate of 1.97 by the end of the weeks trading session.

Surprisingly, The Non-farm Employment Change showed a strong rising trend in the number of employed people during April. The report showed that fewer than 20K jobs were cut in March Compared to February reading of -81K. Combining Non-farm Employment Change with the non-aggressive interest rate last week, many traders see this as an additional sign of a US economic recovery. Moreover, in April the Unemployment Rate was reduced by 0.1% to 5%.

Today, the most important data to be released from the US will be the ISM Non-Manufacturing Composite. This report will reveal to traders more information, about the activity level during April in the US, including new orders and employment. The report is forecasted to fall at a rate of 0.5% to 49.1. Although we expect this fall to weaken the USD, the direction the USD may take may be psychological and continue last week's bullish movement. Traders should closely follow, on Wednesday, the Non-farm Productivity report which will have more information on the US non-farm sector.

In addition, Gold prices fell last week by 6% on the back of the strong greenback. Analysis forecast Gold's bearish momentum to be unstoppable in the short term, because the strengthening of the US economy. Meanwhile, Crude Oil prices retreated last week from its all time high above the rate of 119 USD for one single barrel, to Thursday's 16 days low of below the $110 rate. Oil's falling trend came mainly as a result of the strong dollar combined with announcements-free week from the OPEC countries.

EUR

The EUR fell on Friday to a month and a half low against the USD. The Euro's fall came as positive indicators from the US flooded the news calendar. Traders were perplexed as rising speculations of high inflation in the Euro-zone, didn't stop the Euro's bearishness.

Friday's German retail sales came well below expectation of 0.6% ultimately at a rate of -0.1%. In addition, Euro-zone Manufacturing PMI fell to 50.7 from March's reading of 50.8. Even though the European figures announced last week were not positive, the main reason for the EUR bearish trend of late was a strong dollar and the forecasted recovery for the US economy.

Later on today ECB president Trichet is expected to speak. In his speech we expect president Trichet to supply additional indicators on the economic and interest rate policy direction in the short term. As well; it is extremely important for the EUR investors to follow Thursday's ECB conference. The questions and answers session is expected to give traders clear and strong figures for the short and the long term.

JPY

Last week the JPY underwent a volatile trading session with most of its currency pairs. The JPY lost some strength against the USD, yet it kept a steady rate against its other crosses.

A batch of significant data was delivered last week, including an interest rate announcement which kept the Japanese economy with the lowest rate throughout the industrial world, and Retail Sales figures that reflected another month of increases. The Japanese have now posted 8 straight months of Retail Sales increases showing $116.7 billion worth of sales since the beginning of the calendar year. Several of Japan's economic chiefs gave speeches, stating that as a result of the ongoing uncertainty regarding economic activity and prices, the Bank of Japan (BoJ) will not set the direction of monetary policy in advance.

As for this week, most of the Yen's volatility will derive as a result of overseas economic events. Traders should pay close attention to U.S Nonfarm Productivity results, scheduled for Wednesday, and to the U.S Trade Balance on Friday.

Today is Children's Day in Japan and all banks are closed. Forex Traders should expect low liquidity throughout the day.

Technical Analysis

EUR/USD

The pair has been showing a strong and consistent downtrend since April 23rd, and the momentum appears that it will continue uninterrupted. The small local correction is slowly losing its energy, and the daily chart is showing that the renewal of the bearish trend is quite imminent. Selling on highs might be a good strategy today.

GBP/USD

There is a bearish channel forming on the daily chart as the cable now floats in the middle of it. The local bullish momentum is still healthy within the channel and an upcoming test of the upper barrier is imminent. A breach through the 1.9820 will validate the bullish breach and probably take the cable higher.

USD/JPY

The sharp bullish channel on the daily chart continues with no signs of a stop. The Slow Stochastic is showing a triple top formation with a positive slope, which indicates the possible continuation of the trend. Going long appears to be the right move today.

USD/CHF

The momentum created by the bullish breach through the channel in the daily chart appears to be continuing. The Slow Stochastic is showing no crosses and the RSI is floating around 60. The next target price appears to be 1.0620, which makes it preferable for Forex traders to go long with tight stops.

Wild Card

Gold

There is a very accurate bearish channel forming on the 4 hour chart as gold now tests the upper level of it. The cross on the daily Slow Stochastic indicates the bullish momentum within the channel is over, and that the bearish trend will probably resume. This is a great opportunity for forex traders to go short on a very good entry price.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5557	1.9866	106.03	1.0622	0.9496	0.7918
	1.5531	1.9842	105.81	1.0595	0.9472	0.7889
	1.5506	1.9819	105.56	1.0569	0.9447	0.7863
Support	1.5438	1.9745	104.84	1.0498	0.9374	0.7791
	1.5414	1.9718	104.57	1.0473	0.9348	0.7764
	1.5393	1.9694	104.32	1.0446	0.9312	0.7742

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-05-05		EUR	ECB President Trichet Speaks		-	-
		ECB President Trichet Speaks European Central Bank (ECB) President Jean-Claude Trichet will speak at the 36th Economics Conference organized by Oesterreichische Nationalbank, in Austria. As head of the central bank's governing body, which is responsible for setting the euro zone's short term interest rate, his speeches can sometimes cause market volatility as traders react to clues regarding future monetary policy.
2008-05-05		GBP	Holiday: May Day		-	-
		Holiday: May Day UK banks will be closed in observance of May Day. Low liquidity is expected for the London Forex session.
2008-05-05		JPY	Holiday: Children's Day		-	-
		Holiday: Children's Day Japanese banks will be closed in observance of Children's Day. Low liquidity is expected for the Tokyo Forex session.
2008-05-05		CAD	Holiday: Greenery Day Observed		-	-
		Holiday: Greenery Day Observed Japanese banks will be closed in observance of Greenery Day. Low liquidity is expected for the Tokyo Forex session.
2008-05-05	01:30	AUD	House Price Index	q/q	3.2%	0.1%
		House Price Index Measures the quarterly change in the average price of residential properties.
2008-05-05	03:00	NZD	ANZ Commodity Price Index		2.0%	-
		ANZ Commodity Price Index Measures the rate of inflation (i.e., the rate of price changes) for the nation's seventeen main commodity exports. ANZ, one of New Zealand's leading banking and financial services firms, releases this indicator monthly.
2008-05-05	08:30	EUR	Sentix Investor Confidence		4.1	3.9
		Sentix Investor Confidence Measures investor confidence towards the Euro-zone economy. A rising trend has a positive effect on the nation's currency because it suggest that funds are more likely to invest in European securities, which tends to strengthen the economy.
2008-05-05	12:50	CAD	BOC Deputy Governor Jenkins Speaks		-	-
		BOC Deputy Governor Jenkins Speaks Bank of Canada (BOC) Senior Deputy Governor Paul Jenkins, along with Deputy Governor John Murray, will testify about the impact of the appreciating Canadian Dollar before the House of Commons Standing Committee on Industry, Science and Technology.
2008-05-05	14:00	USD	ISM Non-Manufacturing Composite		49.6	49.1
		ISM Non-Manufacturing Composite The Institute of Supply Management (ISM) Non-Manufacturing Composite measures activity level, new orders, empoyement and supplier deliveries of purchasing managers in the services sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.
2008-05-05	14:00	USD	Fed Holds TAF Auction		-	-
		Fed Holds TAF Auction The Federal Reserve will auction $75 billion in 28-day credit through the Term Auction Facility (TAF). The auction is designed to address liquidity concerns in the credit markets.