Forex Tips & Daily Analysis

Economical News

USD

Yesterday was a relatively volatile session for greenback pairs. Because of Memorial Day in the US, banks remained closed during the day, and as a result an extremely low volume was observed within USD trading. The EUR\USD saw volatile behavior from the beginning of the trading week until the end of the day yesterday, as well as the USD\JPY. The GBP\USD started the day with bearish momentum, dropping as low as 1.9768, but than made a reversal and rose back up to 1.9825.

In observance of Memorial Day no data was released yesterday from the US regarding the USD.

As for today, a basket of data is scheduled for the USD. At 12:15 (GMT) Federal Reserve Governor Kroszner will deliver a speech titled "prospects for recovery and repair of mortgage markets", in Sao Paolo. In his speech, clues regarding future monetary policy might be scattered. Later on, the National Home Price Index Composite-20 will be published, and it's predicted to decrease by 14.3%. The main event for today will take place at 14:00 (GMT), when the U.S New Home Sales is due. This survey measures the new residential buildings that were sold during the previous month, and analysts forecast it to come in at 522K, lower than last month's 526K. The previous month's figure was the lowest figure since October 1991, and further descending trends will demonstrate six consecutive months of deterioration. At the same time, the Consumer Confidence is scheduled. It measures the mood of consumers in regard to economic conditions. It is also expected to reflect a lower reading point than the previous month - 60.0, as opposed to 62.3.

If analysts' expectations of negative results for all U.S data will occur, a bearish trend is likely for the greenback. More importantly, the combination of bad results from these two events can very easily contribute to the EUR/USD testing 1.60 once again.

However, traders should follow carefully over today's developments as unpredicted figures might take place.

EUR

Yesterday, the EUR underwent volatile sessions against its major currency counterparts. The main reason for the high volatility was the low volume that was experienced in the market yesterday, which occurred due to the holidays in the U.S and the U.K, as well as the lack of data from the Euro-zone.

Looking forward to today, some vital news is expected for the EUR as several German market events are scheduled to be released. Early this morning at 06:00 (GMT), the German Consumer confidence was published. This survey, which measures the mood of consumers about the economic conditions, was forecasted by analysts to decline by 0.2 reading point, from 5.9 marks on the previous month, to 5.7. Instead it saw a steeper decline as it registered at 4.9. It contributed to depreciation in EUR bullishness, as the EUR/USD pair saw an immediate 50+ pip reduction. Meanwhile, the German Final Gross Domestic Product survey, which measures the change in the value of all goods and services produced by the economy was scheduled for this morning, and hit its forecasted increase by 1.5%. It is likely that the EUR/USD pair will bounce back from early morning bearishness.

Traders should note that today the EUR will be greatly influenced by USD developments, as traders should also be advised to watch carefully over U.S data.

JPY

Yesterday was a volatile day for JPY pairs. Just like all the other major currencies, it was mainly affected by the holidays in the U.S and the U.K, and the lack of significant news for the other major currencies, which led to a very low volume in the market. As a result, the JPY kept a steady rate against the USD, the EUR and the GBP throughout the trading day.

The only data that came for the JPY yesterday was the Corporate Services Price Index, which rose by 0.5%, reflecting 17 straight month's of positive gains. The index indicates that transportation costs in Japan rose by 3.0%, and that real estate service fees rose by 1.5%.

Later on this week, a bundle of data is due from the Japanese economy. The yearly retail sales report will be published on Wednesday. The Core Consumer Price Index and the Industrial Production will see results on Thursday.

Today, the JPY is absent from the economic calendar, and the USD should be the main catalyst for JPY developments. Therefore, traders should look over U.S data with extra caution today.

Technical Analysis

EUR/USD

The 4 hour chart shows that the bullish channel continues with strong momentum as the pair now floats around 1.5807. Oscillators show that the momentum is still bullish and a breach through 1.5830 will validate a bigger bullish move into the 1.5900 levels.

The RSI is also forming back into bullish formation and supports the general notion.

GBP/USD

The Hourlies indicate that local bullish momentum is still healthy. However the daily chart is showing a strong bearish cross and the 4 hour chart is also slowly joining the bearish notion. Forex traders are advised to wait for a clearer bearish sign on the hourlies before entering the market.

USD/JPY

The hourlies are still bullish as the Slow Stochastic shows no crosses and is floating at the 50 level. The daily chart has been giving mixed signals with no distinct market direction for the past 5 trading days. Going long with tight stops appears to be the preferable strategy.

USD/CHF

The Bollinger Bands are tightening up on the daily chart, indicating the upcoming increased volatility. RSI and Momentum are still negatively sloped indicating some bearish movement today. Both daily and 4 hour chart are showing plenty of room for the bearish trend and a breach through 1.0200 will validate a bigger bearish move into the 1.0150 levels.

Wild Card

Silver

There is still a bullish configuration on the 4 Hour chart, indicating that the momentum is still up. The RSI is floating above 60, which supports the notion that there is still room to run. This provides forex traders with a great opportunity to go long on a relatively solid uptrend.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5830	1.9835	104.65	1.0380	0.9680	0.8060
	1.5800	1.9800	104.30	1.0340	0.9660	0.8025
	1.5770	1.9760	104.00	1.0300	0.9620	0.8000
Support	1.5700	1.9760	103.40	1.0235	0.9550	0.7950
	1.5680	1.9660	103.00	1.0200	0.9515	0.7920
	1.5640	1.9630	102.70	1.0180	0.9475	0.7880

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-05-27	01:00	NZD	Business Confidence		-54.8	-
		Business Confidence Measures the mood of businesses in regard to economic expectations. It's derived from a monthly survey of 1,500 businesses conducted by the National Bank of New Zealand.
2008-05-27	02:00	NZD	RBNZ Inflation Expectations q/q	q/q	2.7%	2.8%
		RBNZ Inflation Expectations q/q The Reserve Bank of New Zealand (RBNZ) Inflation Expectations measures the Consumer Price Index (CPI) expectations for the next two years among business managers.
2008-05-27	06:00	EUR	German Consumer Confidence		5.9	5.7
		German Consumer Confidence Measures the mood of consumers in regard to economic conditions. The reading is derived from a monthly survey that asks respondents to evaluate the prospects for the economy in the future. GfK, a leading German market research company, publishes this indicator monthly. Higher readings point to higher consumer optimism. When consumers are optimistic they tend to purchase more goods and services, which stimulates the economy.
2008-05-27	06:00	EUR	German Final GDP	q/q	1.5%	1.5%
		German Final GDP Measures the change in the value of all goods and services produced by the economy. It's the broadest measure of economic activity and the primary gauge of the economy's health.
2008-05-27	06:15	CHF	Trade Balance		1.27B	1.19B
		Trade Balance Measures the difference in value between imported and exported goods and services. A positive Trade Balance indicates that more goods and services were exported than imported over a given period. A rising trend has a positive effect on the nation's currency. When higher levels of exports are sold to the world, demand for the nation's currency is elevated as foreigners convert their native currency to purchase the exports. The Trade Balance also has a sizable impact on GDP because high demand for exports creates increased employment and production, as domestic factories work to fill this demand.
2008-05-27	08:00	CHF	Consumption Indicator		2.289	-
		Consumption Indicator Measures the total amount spent by consumers on goods and services. UBS publishes this indicator up to three months before official statistics.
2008-05-27	08:30	GBP	BBA Mortgage Approvals		35.4K	-
		BBA Mortgage Approvals The British Bankers' Association (BBA) Mortgage Approvals measures the number of mortgage approvals issued by the BBA for home purchases in the previous month. A higher number of approvals points to a healthy housing market. The housing market is a key influence on consumer spending because two thirds of households own their own home.
2008-05-27	12:15	USD	Fed Governor Kroszner Speaks		-	-
		Fed Governor Kroszner Speaks Federal Reserve Governor and FOMC voting member Randall Kroszner will deliver a speech titled "Addressing Challenges to Innovative Community Development Investment Activities" at the Community Reinvestment Fund Community Development Forum, in Minneapolis. Audience questions expected. FOMC voting members are responsible for setting the nation's short term interest rate, so traders scrutinize their speeches closely for clues regarding future monetary policy.
2008-05-27	13:00	USD	National HPI Composite-20	y/y	-12.7%	-14.3%
		National HPI Composite-20 The S&P/Case-Shiller US National Home Price Index (HPI) Composite-20 measures the annual change in the average price of a single-family home in 20 metropolitan areas.
2008-05-27	14:00	USD	New Home Sales		526K	522K
		New Home Sales Measures the annualized number of new residential buildings that were sold during the previous month. A rising trend has a positive effect on the nation's currency because the housing market is a leading gauge for the overall economy. A high level of housing activity signals that the construction industry is healthy and that consumers have the capital to make large investments. More importantly, new housing activity creates an economic ripple effect as home owners buy goods such as appliances and furniture for their homes, and builders buy raw materials and hire more workers to meet demand.
2008-05-27	14:00	USD	Consumer Confidence		62.3	60.0
		Consumer Confidence Measures the mood of consumers in regard to economic conditions. The reading is derived from a monthly survey that asks respondents to evaluate the prospects for the economy in the future. GfK, a leading German market research company, publishes this indicator monthly. Higher readings point to higher consumer optimism. When consumers are optimistic they tend to purchase more goods and services, which stimulates the economy.
2008-05-27	14:00	USD	Richmond Fed Index		0	1
		Richmond Fed Index Measures the general business conditions of manufacturers in the Richmond Federal Reserve district. The index is derived from a survey that asks respondents to rate the level of general business activity as 'decrease', 'increase', or 'no change'. This report usually has little impact because the New York and Philadelphia Federal Reserve release similar reports about two weeks earlier.