Forex Tips & Daily Analysis

Economical News

USD

Yesterday, the greenback saw bullish trends against most of its major counterparts. The EUR\USD went as low as 1.5670, gaining additional 90 pips vs. the EUR. Accordingly, the USD gained against the rest of the major currencies.

A large portion of data was delivered yesterday from the US markets. The National Home Price Index decreased by 14.4% to the 172.12 level concluding a 15 straight months of yearly declines. However, the New Home Sales report reflected a 3.3% increase, from 509K on March to 526K on April. The report also showed that the median price of new homes in April was $246,100, up 9.1% from March. Later on, the Consumer Confidence plunged to a 16-year low, after dropping to 57.2 reading point.

Today two major indicators are scheduled on the U.S. calendar. The most crucial is the Core Durable Goods Orders, which is expected to come in at -0.4%. The second indicator is the Durable Goods Orders that should mark -1.3%. Both indicators are forecasted to be lower than their previous printings. Later, Minneapolis Fed President Stern is expected to deliver a speech. Traders are advised to look closely for clues regarding future monetary policy.

Given the fact that today's U.S. fundamental data is expected to see a declining trend, the greenback may decline as well.

From where we stand, there might be a great day to check out the calendar for the rest of the week. Additional important indicators are scheduled to be published. The Prelim GDP , Fed Chairman Bernanke Speech, Chicago PMI, Personal Spending, Core PCE Price Index and many more. Analyzing them properly may contribute to investors' possible profits.

Though the forthcoming indices are expected to establish a falling USD trend, the decreasing Oil prices might as well have a stronger affect on the greenback. Therefore, traders should follow today's events with extra caution.

EUR

The Euro finished yesterday's trading session with mixed results. A loss of close to 100 points to the greenback combined with a 40 points loss to the GBP. On the other hand, the EUR gained versus the JPY and the CHF. A likely explanation for this phenomenon is the conflicting publicized news from the different countries.

Yesterday, France President Nicolas Sarkozy advocated slashing taxes across Europe. If accepted by the Euro-zone nations, this tax reduction will possibly ease Oil prices worldwide, and should conclude in weakening the EUR. This might be the initiative to devalue the Euro as was stated by the French Finance Minister during the previous week.

Today there is almost no news to come out of the European markets. The most significant data will be the German Consumer Price, which measures the rate of inflation. Analysts expect German inflation to rise this month, and therefore forecast the index to increase by 0.5%, from -0.2% on the previous month up to 0.3%. The rest of the week will be exciting for the long term traders with the publishing of the Unemployment Rate, M3 Money Supply, Consumer Confidence and many more indicators.

Even with the long term news coming from the Euro-zone is expected to have a appositive effect on the EUR, investors should also keep a keen eye on news from the rest of the world.

JPY

The Japan's currency has for the most part lost strength yesterday versus the major currencies. The JPY underwent falling trends against the USD and the GBP, and saw a volatile session vs. the EUR.

The only news coming yesterday from Japan was the speech given by the Bank of Japan governor Shriakawa. In his speech Sharikawa stated that low Interest Rate may create price stability for the short-term, yet in his mind it will fail to achieve its goal for the long-term.

The most significant data for the Japanese economy today will be the Retail Sales. It is expected to rise by 0.5%, 0.5% lower than in the previous year. In addition, the Large Retailers' Sales is forecasted by analysts to descend by 1.3% from the preceding publication.

As news is still somewhat limited from Japan it would be wise to follow other countries publications, especially from the U.S.

Technical Analysis

EUR/USD

The pair has been going through choppy sessions with mixed trends for the past seven trading days. Several attempts to breach through the 1.5850 level failed, and the pair is now consolidating around 1.5720. The 4 hour chart is showing a moderate bullish reversal signal. Hourlies are also showing signals of local bullish momentum, while the RSI confirms that the direction is indeed up. Going long with tight stops could be a good strategy today.

GBP/USD

The Hourlies and the daily chart are showing that the pair does not have a distinct direction. 4 hour chart indicates that the moderate bearish price movement continues within the bearish channel which still has yet to be breached. The 4 hour chart RSI is floating near the 50 level and the Slow Stochastic is pointing to the continuation of the bearish movement. Forex traders are advised to wait for a clearer signs on the hourlies before entering the market.

USD/JPY

The daily chart is showing that the pair has been range trading with no distinct direction for a while now. The 4 hour chart is showing no clear signals as the RSI and the slow stochastic are floating on neutral territory. Traders are advised to wait for a clear signal before choosing the preferable strategy.

USD/CHF

The pair has been range trading for a while now, as no clear trend direction is in sight. The daily chart is showing mixed signals and the 4 hour chart is showing moderate bearish correction movement. Local bearish momentum on the hourlies might be taking the pair to the 1.0200 USD per CHF. Going short appears to be a smart move for today.

Wild Card

Crude Oil

There has been a sharp bullish channel forming on the daily chart as all time high were breached on a daily basis. There has been a successful attempt to breach the channel on the bottom section of it and the 4 hour chart is supporting the validation of the breach. Forex traders have a great opportunity of joining the corrective move at a very early stage. The bearish trend might have a very high profit potential and a target price of 124.50.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5740	1.9820	105.70	1.0470	0.9670	0.8020
	1.5720	1.9800	105.50	1.0450	0.9650	0.8000
	1.5690	1.9770	105.20	1.0420	0.9620	0.7970
Support	1.5620	1.9700	104.50	1.0350	0.9550	0.7900
	1.5590	1.9670	104.20	1.0320	0.9520	0.7870
	1.5570	1.9650	104.00	1.0300	0.9500	0.7850

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-05-28	00:00	JPY	BOJ Governor Shirakawa Speaks		*	*
		BOJ Governor Shirakawa Speaks Bank of Japan (BOJ) Governor Masaaki Shirakawa will hold a press conference in Tokyo following the Monetary Policy Committee (MPC) interest rate announcement. The MPC's announcement is void of commentary, so traders look to Shirakawa's press conference for clues on future monetary policy action. Heavy market volatility is sometimes experienced during this press conference as traders attempt to decipher Shirakawa's clues. As head of the central bank's governing body, which is responsible for setting the nation's short term interest rate, his speeches can sometimes cause market volatility as traders react to clues regarding future monetary policy.
2008-05-28		EUR	German CPI	m/m	-0.2%	0.3%
		German CPI The Consumer Price Index (CPI) measures the rate of inflation (i.e., the rate of price changes) experienced by consumers when purchasing goods and services. A rising trend has a positive effect on the nation's currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates to bring prices down. Higher interest rates attract foreign investment, thus increasing demand for the nation's currency.
2008-05-28	00:30	AUD	WMI Leading Index	m/m	-0.1%	*
		WMI Leading Index The Westpac Melbourne Institute (WMI) Leading Index measures overall economic health by combining several indicators reported earlier in the month.
2008-05-28	01:30	AUD	Construction Work Done	q/q	-1.0%	2.3%
		Construction Work Done Measures the value of all completed construction projects including new buildings and alterations to existing buildings. A rising trend has a positive effect on the nation's currency because high levels of construction activity can impact the overall economy as builders purchase raw materials and hire more workers to meet demand.
2008-05-28	06:00	EUR	German Import Index	m/m	0.4%	0.6%
		German Import Index German Import Index
2008-05-28	08:00	EUR	Current Account		7.5B	*
		Current Account Measures the quarterly difference in value between imported and exported goods, services, income flows, and unilateral transfers. A rising trend has a positive effect on the nation's currency. The Current Account is a comprehensive accounting of the nation's trade with other countries. It includes the previously reported Trade Balance (which covers trade of goods and services), so traders focus on the income flows and unilateral transfer portions of the report.
2008-05-28	12:30	USD	Core Durable Goods Orders	m/m	0.9%	-0.4%
		Core Durable Goods Orders Derivative of Durable Goods Orders that excludes the Transportation components. Orders for aircraft occur in periodic burst and can severely distort the underlying trend, so traders tend to focus more on this indicator than the overall Durable Goods Orders.
2008-05-28	12:30	USD	Durable Goods Orders m/m	m/m	-0.3%	-1.5%
		Durable Goods Orders m/m Measures the total value of new purchase orders placed with domestic manufacturers for hard goods with a life expectancy of more than 3 years, such as automobiles, computers, appliances, and airplanes. A rising trend has a positive effect on the nation's currency because an increased level of purchase orders signals that manufacturers will be busy in the months to come as they work to fill the orders. Traders watch this indicator closely because of it's predictive abilities.
2008-05-28	16:50	USD	Minneapolis Fed President Stern Speaks		*	*
		Minneapolis Fed President Stern Speaks Minneapolis Federal Reserve President and FOMC voting member Gary Stern will speak about the US economy at the Eau Claire luncheon, in Altoona. 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.
2008-05-28	23:50	JPY	Retail Sales	y/y	1.0%	0.5%
		Retail Sales Measures the value of sales at the retail level. A rising trend has a positive effect on the nation's currency because Retail Sales make up a large portion of consumer spending, which is a major driver of the economy and has a sizable impact on GDP. Traders pay close attention to Retail Sales because it is usually the first significant indicator of the month that relates to consumer behavior and is susceptible to surprises.
2008-05-28	23:50	JPY	Large Retailers' Sales	y/y	0.2%	-1.1%
		Large Retailers' Sales Derivative of Retail Sales that measures only the nation's largest retailers.