Forex Tips & Daily Analysis

The USD had a solid trading session last week, as it appreciated versus all of its major currency rivals. The greenback saw substantial bullishness early in the week as Crude Oil prices continued to fall, and a string of hawkish testimony by US officials infused the growing dollar trend.

Economical News

USD

The USD had a solid trading session last week, as it appreciated versus all of its major currency rivals. The greenback saw substantial bullishness early in the week as Crude Oil prices continued to fall, and a string of hawkish testimony by US officials infused the growing dollar trend. Crude Oil could be labeled as the major reason for all market movement last week, as it continued into its second week of legitimate bearish trends as it dipped below $125/barrel. By Tuesday, following testimony in front of the Senate Banking Committee, by Treasury Secretary Paulson and FOMC Member Plosser, the dollar gained close to 250 points against the EUR, reaching a two-week high of 1.5627. Ultimately, the greenback range traded for the rest of week and closed last week's trading session at 1.5696 versus its European counterpart.

This week should be highly volatility for the greenback, as many crucial news events are expected to take place. On tap this week, Consumer Confidence, ADP NonFarm Employment Change, Crude Oil Inventories, GDP and Unemployment Claims will highlight the US news before Friday, when we can expect Non Farm Payrolls, the Unemployment Rate and ISM manufacturing figures. With a variety of forecasts expected for this week's news, Forex traders should also pay close attention to the movement of Crude Oil to dictate the pace of the greenback.

Investors should note that a fresh wave of IPO's are set to hit the US stock markets this week, which will likely drive the markets up. The correlation between the major stock markets and the dollar has grown over the last few weeks and could prove to be vital in mapping currency movement for the week.

Today, Federal Reserve Governor Frederic Mishkin is expected to speak in Washington D.C. This will be the sole event from the US for the day, and with little else surrounding it worldwide, expect the market to be calm today.

EUR

The Euro has experienced a big turn-around in the last 2 weeks, after reaching recording highs versus the USD and JPY. The Euro-Zone currency has lost ground since eclipsing record marks and has not been able to reverse trends since. The EUR lost close to 250 points against the USD and approximately 100 points versus the GBP before range trading for the rest of the week. As expected last week, news from the EZ contributed to even more bearish movement in the EUR as the previous week was highlighted by French Consumer Spending, German Ifo Business Expectations Index and Manufacturing PMI. These 2 nations, especially Germany, represent a benchmark for what is to come from the whole of the EZ economy.

This week, news from the European Economic Zone could surprise investors and reverse the current bearish move in the EUR. In a news week dominated by German economic data we will German Consumer Confidence, German Prelim CPI, German Retail Sales and German Unemployment Change. If forecasts stay in line with positive expectations it is hard to see how the Euro can't make up some ground, unless the Crude Oil continues to fall. France and Italy will also release some important material this week that could help solidify European economic news in general.

Today the EUR produced one event on the economic docket. The German Consumer Confidence had fallen this month and printed a lower than expected result of 2.1. In spite of this indicator investors will look toward the equity market and especially the price of Crude Oil since it happened to be the best indication to the direction of the European currency.

JPY

The Yen completed last week trading session with mixed results versus the major currencies. The Japanese currency when placed against the USD lost close to 100 points closing last weeks trading session at 107.87. The Yen versus the GBP lost about 110 points as the pair closed at 214.73. Last week, it was forecasted that several indicators including the Tokyo Core CPI, National Core CPI and CSPI would help move the JPY on its own; however a string of unchanged results left the JPY price movement in the hands of outside sources.

This week Japan will provide even more indicators to the economic calendar and will likely contribute to its currency volatility. The Retail Sales, Preliminary Industrial Production and Average Cash Earnings are all expected to see small losses, and along with bullish USD or EUR news could further reducing the much-needed points for the JPY.

Today, local Japanese data could contribute to JPY volatility as we expect Overall Household Spending, the Unemployment Rate and Retail Sales. Data is forecasted to be negative and will likely move the JPY in a bearish direction. Forex investors might consider going short against the JPY today.

Technical Analysis

EUR/USD

Since the last bearish move, the pair has been consolidating around the 1.5700 level for quite a while now. The hourlies provide bearish signals, suggesting that the restoration of the bearish momentum is due. Going long appears to be preferable today.

GBP/USD

The pair has been range-trading for a while now, with no specific direction. The Daily chart's Slow Stochastic providing us with mixed signals. All oscillators on the 4 hour chart do not provide a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.

USD/JPY

There is a very distinct bullish channel forming on the daily chart, as the pair is now floating at the top barrier of it. However, the RSI on the one hour chart has peaked at the over-bought zone, and been dropping ever since, suggesting that a bearish move is impending. A bearish cross on the 4 hour chart's Slow Stochastic also supports that notion. Going short with tight stops seems to be a good strategy.

USD/CHF

For the past few days the pair has been floating around 1.0350, with no apparent breach. Now however, new sings for a bearish move are given in the form of a bearish cross on the Slow Stochastic of both the daily and the 4 hour chart. Traders are advised to wait for the break and swing.

Wild Card

EUR/AUD

The pair is in the midst of a very strong bullish move, as a "W" shape was formed on the 4 hour chart, suggesting that the bullish move has more steam in it. This might be a great opportunity for forex traders to join a very promising trend.

Market Trend

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.5795	1.9970	108.55	1.0435	0.9645	0.7980
	1.5775	1.9950	108.35	1.0415	0.9615	0.7960
	1.5745	1.9920	108.05	1.0385	0.9585	0.7930
Support	1.5685	1.9860	107.45	1.0325	0.9525	0.7870
	1.5655	1.9830	107.15	1.0295	0.9495	0.7840
	1.5635	1.9810	106.95	1.0275	0.9475	0.7820

Indicators

Date	Time GMT	$€£¥	Event	Period	Prev.	Forecast	Imp
2008-07-28	01:30	AUD	NAB Quarterly Business Confidence		-4	-
		NAB Quarterly Business Confidence National Australia Bank (NAB) Business Confidence measures the mood of domestic firms in non-farm sectors. The indicator is derived from a survey of around 350 small to large sized companies.
2008-07-28	06:00	EUR	German Consumer Confidence		3.9	3.5
		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.
2008-07-28	16:00	USD	FOMC Member Mishkin Speaks		*	*
		FOMC Member Mishkin Speaks Federal Reserve FOMC members vote on where to set the nation's key interest rates and their public engagements are often used to drop subtle clues regarding future monetary policy.
2008-07-28	22:45	NZD	Building Consents	m/m	-42.3%	-
		Building Consents Measures the change in the number of new construction intentions. This data is a leading indicator for the construction industry since the issuance of a building permit is one of the first steps in the construction process.
2008-07-28	23:30	JPY	Overall Household Spending	y/y	-3.2%	-2.8%
		Overall Household Spending Measures the total amount spent by households on goods and services. A rising trend has a positive effect on the nation's currency because consumer spending is a major driver of the economy, accounting for about half of GDP.
2008-07-28	23:30	JPY	Unemployment Rate		4.0%	4.0%
		Unemployment Rate Measures the percentage of the total work force that is unemployed and actively seeking employment. A falling trend has a positive effect on the nation's currency. Working people tend to spend more, and consumer spending is a major driver of the economy. However, unemployment usually draws little attention because traders view it as a lagging indicator.
2008-07-28	23:50	JPY	Retail Sales	y/y	0.3%	-0.2%
		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.