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Currency Technical Analysis

Tue, Dec 23 2008, 11:19 GMT
by George Antonakos

FXGreece  |  View company's profile

EUR/USD

Resistance: 1,4030/ 1,4060/ 1,4100/ 1,4150-55/ 1,4200-10/ 1,4260/ 1,4310/ 1,4400
Support : 1,3900-10/ 1,3830/ 1,3780/ 1,3730/ 1,3675/ 1,3630/ 1,3580

Comment: The area of 1,3800-3900 which was previously an important support and target level for the first corrective move, still sets the lower ranges. There is nothing new to add to our yesterday’s analysis, due to the pair’s consolidation.
A retracement to previous tops of 1,4700-20 or to new tops and a reach of 1.3600-50 would be possible if the area of 1,3800-3900 is breached during the retracements. Below 1,3600 the upward scenario would be canceled…Next important support is found at 1,3300…
Important intraday resistance is found at 1,4100-30, followed by 1,4200-10.
Next resistance emerges at 1,4300-20, followed by 1,4700-20, if it is breached before the end of the year…



*STRATEGY :
Low volatility in the market, due to low liquidity conditions. A possible break of 1,4030 could be used for buy orders with target at 1,4100-20. Sell orders could be tried at 1,4100-20, with stops above 1,4150.
Sell positions would also be tried at a downward break of 1,3880, with target at 1,3800…


*The above mentioned strategy refers to orders that we may follow for personal accounts, depending on the market analysis and the potential reach of resistance and support levels. We do not encourage buy or sell orders, as its effective use is based on correct risk management and the ability of position readjustment depending on current conditions.

Published on  Tue, Dec 23 2008, 11:23 GMT

Currency Technical Analysis

Mon, Dec 22 2008, 15:00 GMT
by George Antonakos

FXGreece  |  View company's profile

EUR/USD

Resistance: 1,4030/ 1,4060/ 1,4100/ 1,4150-55/ 1,4200-10/ 1,4260/ 1,4310/ 1,4400
Support: 1,3900-10/ 1,3830/ 1,3780/ 1,3730/ 1,3675/ 1,3630/ 1,3580

Comment: High volatility in the forex market last week, as euro formed a 1350 pip move (which usually could be a hole year’s move), and it closed almost with 550 pips profit. Such high volatility is usually a result of low liquidity during the holidays and due to the market’s crisis and perhaps we should get used to it next year..
After the formation of a classic reversal candle on Thursday and the completion of the 61.8% retracement level from the decline, euro moved downwards to our target area at 1,3800-3900. This week begins with an upward reaction from that area and euro is testing resistance at 1,4050. The corrective move from 1,4720 tops seems normal after the extensive rise and it could be continued towards 1,3600, where 50% retracement level is completed. Euro is likely to form one more upward move towards 1,4700-20 tops of higher and the lower level should be at 1,3350-00 area.
Important support at 1,3800-3900 has been reached and we will wait for the market’s reaction. First important resistance today is found at 1,4060-75, followed by 1,4200. If the area of 1,4310-30 is breached, the retracement should be completed at previous week’s lows, and a pullback to previous tops would be possible.
If first resistance levels at 1.4060-70 are not breached, and price remains within the downward channel in the hourly chart, it would indicate that bears control the game. Reversal signs should appear at 1,3600 (+- 30) area.











*STRATEGY:
The short term trend is bearish and we will follow it trying sell positions at 1,4040-60, with stops above 1,4100 and target at 1,3900. Sell orders could also be tried at a move below Friday’s lows, with target at 1,3600-30. Alternatively, an upward break of 1,4080, may be followed with buy orders and target at 1,4200-50, with stops below 1,4000.
We should mention once again that we are in low liquidity and high volatility conditions, we should be very cautious regarding our short term positions.

*The above mentioned strategy refers to orders that we may follow for personal accounts, depending on the market analysis and the potential reach of resistance and support levels. We do not encourage buy or sell orders, as its effective use is based on correct risk management and the ability of position readjustment depending on current conditions.

Published on  Mon, Dec 22 2008, 15:03 GMT

Euro and Pound Set to Gain This Week?

Mon, Oct 13 2008, 09:55 GMT
by Lena Manousarides

FXGreece  |  View company's profile

The week starts with European markets getting a lift since the early opening, and euro staring the week on a strong note. The reason for this change in sentiment is the outcome of G7 and the meeting of Euro group which happened this past weekend.

The world leaders came together and expressed their concerns over the latest economic crisis and also declared that they will do everything in their powers to stop the crisis from progressing by adopt new rescue plans to “save” the already troubled banking sector. The English Prime Minister Gordon Brown said that the government has a rescue plan in motion which means that 400billion pounds will be immediately available to help the banking system with the low liquidity. Europe is thinking of adapting the rescue plan too with Germany being the one who is said to raise around 500 billion for the same purpose.

It is clear that World leader are trying their best to fight the latest crisis and most analysts are saying that the best scenario we can expect is a mild global recession. The key to all this of course will be how the markets will react and if DOW JONES will continue the recent slide. Early European activity shows that traders are bit more optimistic but with the level of high uncertainty regarding the global economy this might change once again.

EUR/USD opened with a 150 points gap on Sunday and since then it continued its way up towards 1.37. On Friday before the close, we saw a big liquidation in the pair, with euro falling below 1.33 and stops getting hammered. This move was extreme and due the fact that traders were closing their positions due to the weekend.

Today’s calendar is almost empty, with only important announcement being the PPI from UK which came unchanged. Sterling was the big looser last week and we shall see how it will perform this week with CPI data coming out in the next few days. The very fact that UK government took the matters in their hands makes investors less pessimistic about the countries state of economy and from now on all eyes and ears will be on the economic data.

The fact that US dollars strength was mainly due to risk aversion and fear of crisis spilling to Euro zone is making us think that if sentiment changes from negative to less negative, dollar might get pressured once again as traders will get back to what they know best: buying euro and selling the yen, i.e. betting in riskier assets. This of course is far from reality yet, and we need to see proof that the current crisis is starting to ease. Until we need signs of stabilization, we believe the dollar will continue to get bid all across the board and carry trades will continue to deteriorate.

Watch New York open today as US Banks are closed due to national Holiday. The liquidity will be thin so we might see bigger moves later on today. EUR/USD needs to take out 1.3680-1.37 before we can say that there is more to come, however 1.3780 will be a good place to go short. GBP/USD is climbing its way higher but stalled once again at 1.72. A clear break of 1.7230 will give further gains for the pair…

Published on  Mon, Oct 13 2008, 09:56 GMT

Shock and Awe for Markets All Around the World!

Fri, Oct 10 2008, 09:34 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Comment : Lena Manousarides [ lena@fxgreece.gr ]

There is the old saying that “actions speak louder than words” and that is what we can say about the situation which we experience at the moment. The current trading climate all around the world is chaotic and traders are wondering what the next minute will bring. The fear and uncertainty is at high levels once again and the fact that everyone is panicking helps to the high volatility that we see in currencies.

Sterling is the looser of the week with GBP/USD breaking important psychological level of 1.70 and dropping down to 1.6780 in mere moments. The pair found support at that level and rebounded but with the current atmosphere that goes on now, the move might not be finish just yet. Traders are pricing in more cuts from BOE due to the fact that current economic conditions are deteriorating and there is talk amongst traders that UK has been hit worse than other European economies form the recent crisis.

DOW JONES broke 9000 easily yesterday and still trades in the red and the same goes for NIKEI which dropped again more than 700 points even after the new liquidity injection that BOJ did to calm the markets.

Today the economic calendar is empty, with only important release the trade
balance from US. The number is expected better for the dollar however traders might choose to ignore this as they have bigger issues to deal with. Let’s not forget that tonight we have the beginning of the G7 meeting, where 7 of the most influential countries are meeting to discuss the current situation and to try and find a way out of this mess. Market participants will monitor closely the event and it will be crucial to see the reaction after the end of the meeting on Sunday open. It is vital to try and remain without any positions during this weekend as the risk is quite high and there is great uncertainty of what might happen. In the last few Sunday openings we had massive gaps in currencies and especially carry trades and this week we expect the same.

In an environment like that is very difficult to make good judgment calls or to analyze the current moves in the markets. The only way to survive is to either stay aside until the “storm” passes or to follow the fall and go with it. However, who can say honestly that is willing to sell in such low levels or buy at a time that everything goes south?

The question in everyone’s minds is when will this be over? Well from what we hear and read daily in the economic news and from what we see in the daily and monthly charts, it seems like the crisis is far from over but we speculate that the world leaders won’t let it collapse and we might see soon the first signs that there is “light in the tunnel” after all…

Published on  Fri, Oct 10 2008, 09:35 GMT

Nothing Stands in Dollars Way...Bernanke, Rate Cuts or God himself!

Wed, Oct 8 2008, 10:08 GMT
by Lena Manousarides

FXGreece  |  View company's profile

What a week this one is turning out to be, with NIKEI dropping almost 1000 points last night and DOW JONES still trading well below 10.000!The market sentiment remains negative and there is chatter amongst analysts that we haven’t seen anything yet!

Bernanke spoke in Washington late last night and told investors that the economy is suffering at the moment and the damage is much worse than previously estimated (nothing new there) so the bank will have to act accordingly. He also said that inflation starts to ease and the interest rates are not appropriate with everything that went down the past few weeks. This in other words means one thing: the bank will have to cut rates sooner rather than later. Markets didn’t react to his words by selling the dollar, but done the exact opposite and strengthen the dollar against the euro.

Today the economic calendar is empty with European GDP and US pending home sales the only events worth watching. The volatility in the markets is at its highest levels and currencies are acting like some rollercoaster going up and down. This reflects the high uncertainty that all traders feel right now and until we see this reversing, anything is possible.

The sudden move yesterday form FED to buy out all commercial paper directly from eligible issuers, has been the icing in the cake for investors, as this move was indented to bring some kind of assurance to the markets, but end up doing the exact opposite. The reason was that it was perceived as an act of desperation and official acceptance that US banking sector is collapsing, therefore risk aversion returned once again.

EUR/USD is trading in a “trance” these last two days and a move towards 1.3740 was completely reverse in less than an hour. The pair is still trading within 1.35-1.38 range and only a break can lead us to the next level. We favor the downside as everything that happens these days only strengthen the dollar further. As long as risk aversion persists, dollar will continue to get bid against the euro.

All day so far, ECB, BOE and FED are injecting money in the markets in a desperate attempt to bring stability in the markets, but investors don’t get easily “fooled” as they know that there is possibly worse to come.

Another phenomenal move was seen by all carry trades, as USD/JPY broke 100 due to risk aversion and GBP/JPY is moving fast and heavily towards 170. The later has lost more than 2000 points in two days and there is no point for now to try and find a bottom. Until we see markets stabilize the only way to go is south!

Let’s see what will happen today after New York open and how the markets will react to Bernanke s words and the latest attempts by Central banks to alter the already negative sentiment...

Published on  Wed, Oct 8 2008, 10:11 GMT

How Long Can the Dollar Remain Strong?

Tue, Oct 7 2008, 09:26 GMT
by Lena Manousarides

FXGreece  |  View company's profile

What a start of the week we had yesterday, with all markets in the red and DOW JONES breaking important psychological level of 10000 for the first time since October 2004!

What we witnessed yesterday was beyond reason and normality, and many traders all across the globe were left shaken and confused by the markets shenanigans. The main reason for this absurd move in all markets was fresh and renewed fear and uncertainty regarding the global economy and the fact that it became known that the $700B was not enough to fund all Banks and more money would be needed. The move by the FED to provide another $400B was seen by many investors as desperate move; however it was clear from the US authority approach that in desperate times we need desperate measures!

EUR/USD broke important support level of 1.35 and printed a new low at 1.3440 where it corrected form then on. Today the pair was trading well above 1.35 with 1.3620 highest levels seen so far. The move was not enough to break further higher though and pair dropped 100 points.

At a time like this there is a question amongst traders, why the dollar is so strong with US economy going into recession? Well there is not an easy answer there; however it might be interesting to see that in previous recessions, US currency was always strong in order to help the trade deficit. With the 700 billion rescue plan, the trade deficit will be even wider and therefore the only way to fight it is through a strong currency. Also the fact that we have the US elections soon is another factor to consider, however with this madness that we experience daily all the logical explanations as to why anything happens, are out of the window.

Today the economic calendar is empty, with only important events being the speech by Bernanke in Washington regarding the bank’s monetary policy and the state of the economy which traders will monitor closely due to the latest developments. Analysts are looking for signs as to what the bank is planning to do to fight the situation and many predict that it will be forced to cut rates sooner rather than later. Also a bit later today we have the FOMC minutes from the last meeting and again traders will be looking for hints as to what are the banks plans.

EUR/USD is clearly one downtrend and as long as it is trading below 1.3660 we shall see further losses. If the pair breaks 1.34, next important level is at 1.3360.

So, in a few words, we are experiencing very difficult times right now and the only wise thing to do is to stay aside and remain aside until the markets calm down. If we trade we need to be aware that technicals and fundamentals do not apply these days and we can only trade the trend until signs of reversal arise...

Published on  Tue, Oct 7 2008, 09:29 GMT

Euro Continues to Deteriorate Against the Dollar!

Mon, Oct 6 2008, 09:53 GMT
by Lena Manousarides

FXGreece  |  View company's profile

The week starts with euro weakness all across the board and especially against the dollar, after the pair opened on Sunday night at 1.3630 from 1.3780 Friday close. The Euro extended its losses during Asia and continues till now to trade on the downside breaking important support level of 1.3580 and printing new multi year low at 1.3540.

The fact that US government accepted the $700Billion rescue plan, after weeks of discussions, combined with the recent negative sentiment regarding the European Economy, are the main reasons why the European currency seems to suffer. Let’s not forget that Trichets speech after the meeting last week basically gave the green light for rate cuts due to the slowing of the economy and easing inflationary pressures.

This week we have a few economic events to keep us occupied, with most important ones being the FOMC minutes and Bernanke speech. Also we have BOE rate decision on Thursday and traders have already priced in a rate cut of 25 points. It will be interesting to watch the FOMC minutes after the last meeting and traders will monitor closely any comments that Bernanke and co says regarding the inflation. Analysts predict that due to the recent financial crisis and the liquidity problems, FED might be forced to cu t rates together with other Central Banks. All will be revealed soon and if we see signs that Fed is actually thinking of easing rates further, dollar will be hit with some weakness.

Today economic calendar is empty, and therefore the markets will have a chance to digest all the events that were unfolded this weekend. We had the Paris emergency summit , where 4 of the major European economies met in order to discuss financial crisis in Euro zone and what measures they need to take in order to survive the turmoil. News that another German Bank, Hypo Real Estate failed, gave European economy another blow and German Finance Minister Angela Merkel told reporters she will do anything in her power to save the situation.

EUR/USD continues to deteriorate and next support level lies at 1.3480. The pair has suffered many losses and charts suggest that there is more to come. If 1.35 gives way, we don’t have any important support levels till 1.33.

Let’s see what today brings and how New York open will react to recent euro drop. As market participants are in search of EUR/USD bottom the question now is where the drop will start to fade?

Published on  Mon, Oct 6 2008, 09:55 GMT

Crunch Time for the Dollar! Mr. Trichet has spoken...

Fri, Oct 3 2008, 10:22 GMT
by Lena Manousarides

FXGreece  |  View company's profile

The bank has opened the door for cuts! The inflationary pressures have been diminished as he said, but they have not disappeared. He spoke to the reporters concerning the slowing of the European economy, which is equally as affected by the global economic crisis. His tone was far more dovish than anticipated, and the traders “honored” his words, by heavily selling the European currency against the dollar and other currencies too.

The EUR/USD broke important support levels of 1.38 easily and printed a new low of 1.3740. The move was erratic and violent and stops were hit at once. However, the move was not strong enough to break lower and we had an immediate reaction back above 1.38. Today the pair is correcting further and as long as it holds 1.38 as support there is room for further gains.

The market today awaits two big events: the Non-farm payroll data and the House’s decision regarding the bailout plan. The payroll data is expected to print another negative month at -100.000, however the market was already priced in the number and in order to see some serious dollar weakness, the number has to be worse than that. Let’s not forget that these days the theme is “buy the buck” regardless of the situation and it probably won’t change for some time. It will be interesting to see how the market reacts to this news and if at the end it is proved as a non-event.

The other important event today is the bailout plan decision expected sometime later. Analysts expect that the House will finally accept the plan today, however if we have another rejection, the dollar and the global markets will be pressured. The result will be crucial, as the fates of many investors depend on it! Let’s not forget when Congress said a big fat NO to the plan and how the market reacted, this time the markets message is clear: If the plan is not passed, global markets will collapse!

So, it will be interesting to see the trader’s reaction to the news and how it will be traded afterwards. We are all aware that no matter what the economic data of the US and the state of the economy, the dollar is getting stronger by the day. How long can it last though? The charts are saying potentially 1.35 at the least. However fundamentally even with the bailout plan, the US economy is far from ready for a strong dollar, what with the wide trade balance and the high unemployment numbers and the prospect of recession being very high too.

EUR/USD is trading higher going into the New York opening and if 1.3920 gives way, then the pair has 1.3980-1.40 as its next resistance.

GBP/USD is trading higher too, but not with the same heavy tone as the UK data today was disappointing, therefore we need to see a clear break of 1.7780-1.7820 in order to say the pair will gain further.

Published on  Fri, Oct 3 2008, 10:23 GMT

Will Trichet "Save" Euros Fate or is it All Doom and Gloom?

Thu, Oct 2 2008, 09:26 GMT
by Lena Manousarides

FXGreece  |  View company's profile

The Senate has spoken...the vote was positive this time, as markets already priced in and now it’s up to the House on Friday to continue the matter further. The market reaction at the news was positive, however it didn’t last long as there is still uncertainty about the economic future.

The economic calendar today is almost empty, with only crucial event today’s rate decision by ECB. Analysts predict that bank will leave rates unchanged; however Trichets rhetoric will possibly change from neutral to easing. It is believed that due to the latest economic developments, Trichet will have to acknowledge that Euro zone is not immune to the economic crisis and it might need a rate cut after all. The fact that inflation shows moderation in Germany and other European countries, together with slowing growth might be the catalyst for the banks change of heart!

Whatever today’s outcome one thing is for sure: volatility will remain massive and trading will be choppy and erratic. Euro is at a make or break point as it holds still the 1.38 where a six year uptrend line lies. There are still hopes for euro bulls that it will keep this level and correct from there towards 1.40. However, today will certainly be the day to see Euros performance against the greenback and other currencies and if the downside move persists we might have important change in trends.

EUR/USD broke important support levels at 1.39, printing new multi year low at 1.3850 at the time of writing. The pair is trading heavily and is clearly on the downside move but it will be crucial to watch how it reacts after the New York open. Next support level to watch for the pair lies at 1.38 ahead of 1.3780.

GBP/USD is trading still on the defensive and a clear break of 1.7630 will open way towards 1.75. The fact that the pair cannot correct above 1.79 is definitely negative and only a break of 1.7920 will alter our dovish stance.

Let’s see what Mr. Trichet will have to say for himself and what the markets will tell him back! Watch the Q&A after his speech, because today’s questions will be no doubt about Euros fall and rate outlook, as the whole world wants to know, where we are heading next?

Published on  Thu, Oct 2 2008, 09:31 GMT

Euro Weakness Found Short Term Bottom at 1.40...More To Come?

Wed, Oct 1 2008, 10:11 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Yesterday was quite a day for world currencies, with EUR/USD falling more than 400 points in a move which can only be described as violent and choppy. The reason was seemingly beyond the scope of fundamentals and technicals and could only be justified by the fact that traders closed their trading books due to quarter month-end and bought back the dollar to adjust their positions. Also the announcement that the now infamous bailout plan is going back to Congress for a second chance to be voted, gave traders some kind of reassurance that credit crisis could start to ease.

Other than that, the economic data from US was better than expected, however in order to start being optimistic about the state of the economy, we need to see a better number in the Non-farm payrolls later this week. Today we have the first estimation from ADP, which will be monitored closely by traders, and if the number is below forecasts, we might see the dollar getting pressured all across the board. The fact that the US economy had 9 months continuous negative payroll data, gives fuel to analysts to predict that if this continues for two more months, the economy will be officially in recession.

Today, apart from the ADP announcement, we have the ISM Manufacturing which will be interesting to watch as it is still below the psychological level of 50. If the number is better, the dollar could strengthen across the board. Traders don’t really pay much attention to fundamentals these days; however every surprise in the number either way is always welcomed.

The question now arises is what happens with tomorrow’s ECB decision? The general market sentiment is Trichet will leave rates unchanged, as he doesn’t like surprising the markets, however due to the credit crisis which spilled in the European banks and the easing inflationary pressures, a rate cut could be in the cards for the near future. Analysts from several banks have already priced in at least two rate cuts before the year end, so it will be crucial to hear Mr. Trichet’s words of wisdom in his press conference tomorrow.

So, two things worth monitoring today are the bailout plan situation, which is going back for a second vote and also the payroll data estimation from ADP. Both events will no doubt give traders some food for thought and if the answer of the Congress is positive, DOW JONES and the dollar eventually could gain big time, as the markets worries will be restored.

EUR/USD corrected its losses from 1.40, printing a daily high at 1, 4165 at the time of writing. As long as the pair trades above important psychological 1.40 there could be further correction towards 1.43. However, if 1.40 gives way later today we might see September’s lows at 1.39 once again. On the upside, the pair needs to break 1.4250 and 1.43 in order to continue its way up.

GBP/USD broke important support level of 1.7920 and printed a weekly low at 1.7760. The pair is still trading heavily and the daily charts show that this might continue for some time. A clear break of 1.7730 could open way for 1.7570 ahead of 1.75. On the upside, resistance lies at 1.7880 and 1.7920 were short positions could be taken.

Published on  Wed, Oct 1 2008, 10:12 GMT

Traders Gave Their Answer to Rescue Plan Rejection by Causing Mayhem in the Financial Markets…What ‘s Next?

Tue, Sep 30 2008, 09:29 GMT
by Lena Manousarides

FXGreece  |  View company's profile

The Congress has spoken: A big “NO” for the 700B rescue plan…The investors have spoken too: A negative response at the decision, with all markets deep in the red, DOW JONES falling more than 700 points, oil down 10 dollars and all other markets trading like a rollercoaster with frustration and fear the main drivers! What a chaos in the financial world! The three musketeers Paulson, Bernanke and Bush failed to impress the US Congress and now we are back where we started.

EUR/USD was trading at 1.4380 at the time of the decision, and a big move taken it within a few minutes all the way back above 1.45.However, move was exaggerated as liquidity conditions were thin and stops got hit after 1.4480. This morning the pair was trading back below 1.44, however so far it holds good support at 1.4330. A clear break of that level will open way to 1.4280 where buyers will possibly emerge.

GBP/USD was the weakest pair of all, as it only managed to go up to 1.8175 after the decision and later it gave all its gains back. Sterling is really on the defensive these days, what with bad economic conditions and high inflationary pressures making it difficult for BOE to decide its next move on rates. Analysts predict that the bank will have to cut rates soon and bets are on for the next meeting. Next level to watch is 1.7920-50 were good support lies there and only a break of that level will push the pair towards 1.75.

There are other factors that cannot be ignored regarding the Congress rejection. Let’s not forget that in a few weeks we have the US elections and the political games have already started. The economic crisis is certainly hitting all parties involved, however the republicans managed to come out as the “good guys” who said NO to this risky multi billion plans at times were the American public is looking for reassurance that things will be okay in the near future.

There was news this morning that the plan will go back to Congress tomorrow slightly “altered” in order to be voted once again. Now, why do we have the feeling that this time the plan will be all of a sudden approved? Let’s see what the developments will be and one thing is for sure, plan or no plan the global economy is suffering at the moment and the next question is not if we have further liquidity problems in the banking sector, but when?

So, it will be interesting to see New York opening and how will the futures and commodities markets react to all this and if the dollar continue to be up despite all this turmoil in the financial sectors. Don’t forget that one of the reasons why dollar is strong is because Euro zone is suffering as well and also traders start to price in that ECB might be pressured to cut rates as soon as this Thursday…

EUR/USD seems to be trading within 1.43-1.46 range and only a clear break of those levels will give us some king of direction as to where the pair is heading next. 1.4280 and 1,45 good support/resistance levels.

GBP/USD is still on a downtrend move; however, it managed so far to keep 1.7920 intact. A clear break of that level will open way for 1.7860 ahead of 1.78. On the upside, the pair has to take out 1.8180-1.82 in order to move back up towards 1.84.

Published on  Tue, Sep 30 2008, 09:32 GMT

Week Has Started With Euro and Sterling Weakness…More to Come?

Mon, Sep 29 2008, 09:53 GMT
by Lena Manousarides

FXGreece  |  View company's profile

What a start of the week for euro and sterling, as the Sunday open saw both currencies deteriorating against the dollar. EUR/USD broke important support levels at 1.45 and 1.44 printing new weekly low at 1.4305 at the time of writing. The extended weakness is caused mainly on news that European Banks are in trouble, after Belgian-Dutch Fortis Bank and British Bradford & Bingley were near bankruptcy and both were saved from joined efforts of government and other Banks.

Markets are incredibly agitated in the last days, what with US 700 billion rescue plan still not confirmed, bad economic data, banks and other investment houses reporting big losses and the whole financial system in turmoil. At times like these, investors usually buy safe haven currencies or gold and exit risky trades till things get better.
This week the economic calendar is full of important data, with ECB rate decision on Thursday and Nonfarm payrolls the releases that traders will monitor closely.

Today the economic calendar is almost empty, with some data out of US to be the only ones worth watching. We have the PCE data and Personal spending/income, which are expected slightly higher, but markets will probably ignore them for now as they have bigger issues to catch their attention.

Traders will position themselves for the week and already the bets are on as to what Mr. Trichet and his pals will decide this Thursday. The fact that economic data continue to disappoint from the Euro area, combined with easing inflation, gives fuel to analysts to say that maybe it’s time for ECB to stop with the hawkish stance and change its monetary policy from neutral to easing. Euro is weak on the back of these speculations and all eyes and ears will be on Trichet when he delivers his speech after the decision.

GBP/USD is also very weak these days and the trend so far seems to be on the downside, however 1.7920 seems to be a good support level and we think that the pair might find some short term support at least for now. Things in dear old England don’t seem to be better either and the latest victim of economic turmoil is Bradford & Bingley, one of the biggest mortgage lenders in the country, which UK government decided to nationalize after the lender came near bankruptcy. This news kept the sterling under heavy pressure and traders now start speculating that BOE will have to cut its interest rates sooner rather than later.


EUR/USD is trading lower since the European opening and if 1.43 gives way, 1.4280 would be a good support level and a place to go long with stops under 1.4230.

GBP/USD is under pressure too and next level to watch is 1.7960 ahead of 1.7920. Long positions could propably be taken at 1.7920 a very good support level with stops well under 1.7880.

So, all in all the name of the game in the markets across the globe seems to be fear and uncertainty for the future and that reflexes on the moves which are directionless and in the case of euro and sterling “choppy “ and violent. Let’s see how markets will react after the New York opening and what will happen with this “brilliant” US rescue plan which is expected to be voted sometime today…

Published on  Mon, Sep 29 2008, 09:58 GMT

Is Dollar Comeback a Far Fetched Dream?

Tue, Sep 23 2008, 12:16 GMT
by Lena Manousarides

FXGreece  |  View company's profile

This week is certainly turning out to be full of action, with the EUR/USD moving more than 450 pips and the oil making a record breaking move of 26 dollars from $103 to $130!

The reason for these volatile moves was once again the negative market sentiment which has controlled everything in the last days, and the need for investors to exit their risky positions amid the market turmoil.

The EUR/USD broke important resistance levels in a violent move yesterday, after the 1.4450 London closing daily low shot all the way up to 1. 4860. This move was mainly due to negative dollar sentiment and thin liquidity, but also because traders are not sure anymore how the dollar will benefit from the economic meltdown of the last few weeks.

Today the economic calendar is devoid of important releases; however traders will closely monitor Bernanke and Paulson when they both testify in front of the Senate regarding the financial crisis, plus the Fannie Mae/Freddie Mac situation. Their words will be crucial for markets all across the board and if they signal the crisis worsening over the next months, the dollar will continue to dive against its counterparts.

The very fact the US government and the FED joined their powers this weekend in order to make a rescue plan for all those companies that suffer from the crisis, was initially interpreted by the market as good news, however come Monday and the good feeling was lost altogether along with stock market gains we saw recently. Market fear and uncertainty remains the name of the game and until we see stabilization in the economy, it won't change.

In the next few days we have Bernanke and Paulson’s joint testimony and also durable goods orders from US and GDP. Additionally, we have some news from the Housing sector which if it comes out negative again will only put further weight on the greenback.

The questions arising from all this is still the same: Will the dollar continue its recent comeback or return to the dog house once again? Is the move towards 1.49 for the EUR/USD just a simple correction of the big move down from 1.60 to 1.38, or will we see the pair climbing 1.50? All these questions will be answered in the coming days and as long as 1.50 stays untouched, we might see the pair moving from 1.45 to 1.50 until a break occurs. Don't forget that at 1.48 the pair is still in a consolidation mode since 1.4970 is the 50% Fibonacci level from its recent fall.

One argument that some analysts have is that all this negative sentiment which has been building over the last few days, with banks collapsing and economic data deteriorating, cannot be good for the dollar outlook and if economic conditions in US don't improve, EUR/USD can easily reverse if not all some of its losses towards 1.53.

Let’s see however how today’s first day of the testimony will go and what the two ’brave men’ will say to us all, but most importantly, how traders will interpret their words in relation to market moves.

Published on  Tue, Sep 23 2008, 12:17 GMT

Will Dollar Be the Next Victim of Economic Meltdown?

Wed, Sep 17 2008, 11:36 GMT
by Lena Manousarides

FXGreece  |  View company's profile

What a week this one is turning out to be, with currencies rising and falling like a roller coaster.  For instance, the EUR/USD opened at 1.4480 on Monday and lost all its gains on the same day; dropping all the way down to 1.41. Tuesday was no better, as traders were waiting for the FOMC meeting for any hints as to how the dollar would fare.

Since Monday morning's abrupt awakening when Lehman Brothers told the world they were filling for bankruptcy, markets have been deeply frustrated, with DOW JONES losing a record 500 points and NIKEI dropping 600 points. These are fragile times for the world economy and news that two of the biggest Investment groups, Lehman Brothers and Merrill Lynch were in turmoil, made investors even more wary and therefore a broad liquidation occurred.

From then on, speculation started that the FED would cut the rates this week, but once again the American Central Bank refused to be pressured and left the rates unchanged. The statement afterwards was dovish for the dollar, as the Bank implied that inflationary pressures are starting to elevate. The drop in oil and appreciation of the dollar were two factors that the Bank cannot ignore for the future of interest rates.

The EUR/USD was initially down on the FOMC meeting, with the dollar gaining across the board, however after traders realized that Bernanke and co. will possibly stay neutral when it comes to the rates, the dollar lost its gains and the pair returned to its pre-meeting levels.

Today’s calendar is almost empty, with the only news form America being the building permits. Traders will monitor closely all developments in the Housing sector, but the news is not expected to cause any big moves. The other important event today was the BOE minutes from the last meeting where they decided to leave rates unchanged. Today’s outcome was 8-1, which means that 1 wanted to cut rates and the others wanted to leave them unchanged. Blanchflower was once again the one who insisted on cutting the rates as much as 50 pbs.

The GBP/USD broke higher today, printing 1.7980, however fresh worries of HBOS shares being in trouble again saw the pound in a free fall, losing all its original gains. The pair is trading at 1.7880 at the time of writing and a clear break of either 1.7950 or 1.5830 will give us the next direction. With markets being so up and down these days, there is no clear direction for the currencies and although sterling is still on the defensive, it has managed to stay above 1.75 and kept that level as a good support.

The EUR/USD is trading heavily these days with many whipsaws and fake moves,  and the next resistance level now lies at 1.4280-1.4320. A clear break out of those levels can lead much higher towards 1.44. On the downside, good support levels are at 1.4180 and 1.4130 and only a clear break of that can lead below 1.41. As the pair moves we can always try to buy near 1.41 and sell near 1.43.

In the next coming days we don’t have anything very important news wise, however all eyes will be open for more developments in the banking sector. Let’s not forget that fundamentals and technicals these days seem to take second place, as traders act only on their fears and speculations.

One would wonder how come the dollar doesn’t collapse against its other counterparts, what with all data coming out badly and more US Banks reporting serious losses. Well, the answer is that although the EUR/USD has managed to recover above 1.40 in the last week, there are still downside risks and only a clear break of 1.4350-1.44 will open way for further gains in the pair till 1.46-1.47. Let’s not forget that in troubled times, traders are using the dollar as safe haven and that is what we see at the beginning of the week when risk aversion took place.

Let’s see what today brings after New York opens and how traders will react to the ongoing economic developments and credit woes.

Published on  Wed, Sep 17 2008, 11:38 GMT

Dollar Still Strong... But For How Long?

Mon, Sep 8 2008, 10:57 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Market opening was once again a very interesting experience for all the currencies and especially carry trades, as most yen pairs opened above 300 pips form Friday close and EUR/USD above 1.43.
The reason for such abrupt moves was this weekend’s happenings, after US government took it upon themselves to help out Fannie Mae and Freddie Mac and once again tried to “save the day”. Treasury Paulson confirmed early Sunday that the decision was made to help the two big mortgage lenders after the big liquidity crisis that broke months ago. This event together with the new hurricane threat, were enough to put a dent in dollars exquisite Friday rally.

The Nonfarm payrolls proved to be a non event, after the very bad numbers showed what traders already feared: that US economy is heading to recession. The number was worse than expected at -84000, but what really surprised markets was the high percentage of unemployment at 6.1%. News was taken badly at first and therefore dollar was sold all across the board, but after an hour or so the familiar euro sellers emerged again and took the currency all the way down to 1.42.

It is now very clear how volatile and directionless the market is as we see choppy trading almost every day and a lot of fake breakouts at the same time. With all the problems that US economy and Euro zone is facing, it is natural that traders don’t really know in which currency to place their bets and that is why fundamentals and technical’s don’t seem to apply.

EUR/USD close at 1.4270 on Friday night, but the Sunday open found the pair all the way back above 1.43. The move found first resistance at 1.4380 and then this morning at 1.4430. Europe opening took it all the way down to 1.43 and at the time of writing the pair is visiting the gap at 1.4280. There are always euro bears ready to sell and if pair does not manage to close above 1.43 tonight then 1, 40 is still in the picture for the next few days. However a close above 1.4430 might start giving us the first signs that a euro reversal might be intact.

This week the economic calendar is almost empty from important economic releases, with US retail sales, pending home sales and PPI the only ones. These numbers will no doubt stir things up especially if retail sales print a very bad number. Other than that we have some important economic releases out of UK, with PPI, Trade balance and the Treasury committee hearing in front of the parliament. The hearing will be monitored closely by the markets for any signs as to how bad the economic conditions are in England and what the Bank of England is thinking regarding the next rate decision. Let’s not forget that the fact that BOE kept rates unchanged last week, shows that the bank still worries about the inflation but if CPI comes out very weak too then a rate cut might be the only solution.

EUR/USD is still trading below 1.43 and a clear break of 1.42 will probably put further pressure in the pair. Next support now lies at 1.4130 ahead of 1.41.

GBP/USD is trading lower too and reversed all last night’s gains from 1.79 all the way down to 1.7660. A clear break of 1.76 will open the way to 1.75 a good support level for the time being.

Today the two day OPEC meeting starts in Vienna and traders will follow any comments of the officials regarding the recent oil slide. At the end of the meeting there will be a press conference and the outcome will be crucial for oils direction. At the moment of writing oil is trading above 107 and it will be interesting to see if 100 level will be seen this week. Analysts believe that the price of oil might stabilize around 110-120 for the next coming months however the direction will be influenced from any political or geopolitical events.

Let's see how New York reacts after today's opening and most importantly if EUR/USD will finally find a good base for the long waited correction. Most likely the pair will continue to slide towards 1.40 until a correction happen, but first the pair needs to take out 1.42 and close today below that level...

Published on  Mon, Sep 8 2008, 10:58 GMT

Will This Week Give Euro and Pound a Reason To Rise and Shine?

Tue, Sep 2 2008, 14:12 GMT
by Lena Manousarides

FXGreece  |  View company's profile

What a week this one is turning out to be for the sterling!   The British currency broke an important psychological level of 1.80 following bad economic data and Alistair Darling's comments that the UK economy is suffering the most in 60 years were worsened with the prediction the economic crisis is set to continue into next year.

GBP/USD was trading at 1.8020 after the London closing and while US was on holiday the action was muted until Japan opened. The pair easily broke 1.80 in thin trading conditions and immediately dropped all the way down to 1.7850. Today it consolidated back to 1.79 but the move wasn’t strong enough to maintain its gains, therefore the pound slumped once more under 1.79.

Today’s economic calendar has ISM Manufacturing out from the US and is expected to print a negative number, however we think the reaction will be limited as the one thing in traders’ minds now is Thursdays BOE and ECB rate decisions; which are expected to really shake things up.

EUR/USD is trading below 1.45 and a daily close above that level could mean 1.44 is the next level. However as with sterling the move is now exaggerated and therefore we believe both pairs are nearing strong support levels with EUR/USD at 1.4380-1.44 and GBP/USD at 1.7660. One correction move might be coming soon and maybe the market is expecting Trichet's speech in order to begin the move upwards.

The rate decisions are expected to be both unchanged for ECB and BOE too, however some analysts are speculating that the BOE may surprise markets this week and cut rates. This scenario does seem a bit extreme as the pound has lost over 1500 pips in the last few weeks and therefore the Bank might not want to put further burden in the currency. Maybe a way to fight inflation is through a soft currency? Whatever the plan that King and his friends have will be revealed in the coming weeks and the pound will act accordingly. Let’s not forget that the traders have already priced in a cut in the rates and if that does not occur, the pound may be open for some needed gains.

The ECB rate decision will be announced on Thursday too, with market players monitoring Trichet's every word during his press conference. In his last meeting, the ECB President already told the markets that the Bank will have to see how the inflation is performing and will decide after September what they will do. The fact most traders are negative about the rate outcome, together with speculation that cuts are going to be the next theme for the Bank, are the main reasons for the Euros weakness. Therefore if Trichet does not back up rate cuts and asks maybe for further increases in the coming months, the Euro will have a reason to rise and shine.

The other important economic event this week is Non-farm payrolls, which is once again expected negative at -73000. Don’t forget the number is negative for the 8th consecutive month which certainly puts pressure on the US economy. Back in 2000 we had 10 consecutive months of negative payroll data and the country was already in recession. If by any chance the number is better than expected, the dollar might continue its strength without problems.

The other thing that was weighing on traders’ minds this week was Hurricane Gustav, which although feared severe, last night it was downgraded to a tropical storm and therefore the oil sold off below 110. That helped the dollar bid all across the board and made 1.45 level breakouts easier.

Today the action again is big and sterling together with euro are making new lows against the dollar by the minute. This trading action we think might be limited in the next few days, as Thursdays rate decision may make positions smaller and traders more aware.

Let’s see how the market will react with this week’s events and if the euro and pound are finally ready for a comeback!

Published on  Tue, Sep 2 2008, 14:16 GMT

Will This Weeks Data Give Dollar Further Strength?

Mon, Aug 25 2008, 12:32 GMT
by Lena Manousarides

FXGreece  |  View company's profile

So far, this month has been full of action and the market is certainly not in “holiday mode”. The fact the economic data coming out of US and Europe disappoint gives traders a feeling of uncertainty, which is very clear in the choppy trading we have seen these days.

Last week the euro managed to gain against the dollar after it broke 1.48, reaching 1.49 within a few hours. However the move was not strong enough to continue and therefore dollar bulls took control of the situation and the pair lost all its gains on Friday. Bernanke’s speech in Jackson Hall didn’t offer anything new for traders, who already knew the US was suffering with the subprime mortgage and low liquidity. Bernanke said he is unsure of the inflation and he basically gave the idea that the bank could keep interest rates unchanged through 2009. All in all he was dovish for the dollar, however traders decided to ignore him and still bought the greenback all across the board.

This week the economic calendar looks bit more “alive” and there are some important economic releases that traders will monitor closely. Today we have existing home sales which are expected to print better than last month and if the number is good, the dollar may see modest gains. Later on in the week we have durable goods orders and new home sales. On Tuesday we have the FOMC minutes which no doubt will play an important role in the dollar’s direction over the coming days. The fact that traders were optimistic about rate hikes in the future is one of the reasons why the dollar is strong these days and if the outcome of the meeting shows there is no chance of having higher rates for some time, the dollars outlook may not be quite as rosy.

Other important economic events this week are the German IFO which will again cause quite a stir in the markets as every economic release out of Euro zone from now on is affecting the Euros direction no end! The last set of data was very negative and if that continues then the euro may make a bid for 1.40.

The EUR/USD is trading above 1.47 and as long as 1.4630-50 is intact, we might see a further move towards 1.48-1.4850. However if the economic data out of US is better and surprises the markets, we could see the pair breaking 1.4630 and making new lows in the coming days. We believe that 1.4450-1.4550 will be good levels to buy the pair for a deeper correction towards 1.50.

The pound is really weak at the moment and that is to be expected after the GDP last Friday printed a multi-year low number which made analysts think the UK is already in recession. The fact the economic growth is struggling and the unemployment is going up makes the economic future uncertain and therefore the English currency remains very weak.

The GBP/USD finally broke the important 1.85 level and printed a new multi-month low at 1.8430. A clear break of 1.84 brings 1.8320-50 in the picture. From that level however, we may see consolidation for the pair as it is already trading in oversold territory.

Let’s see how the markets will react this week to the fundamentals and if the returning traders will support further dollar strength

Published on  Mon, Aug 25 2008, 12:33 GMT

EUR/USD Rejects 1.60 Again! More Dollar Strength Expected?

Mon, Jul 21 2008, 13:58 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Last week was quite a week, with the euro achieving new highs above 1.60, the EUR/USD printing 160.40 late on Tuesday and the oil gaining even more strength. The cause of the dollar weakness was nothing more than speculators wanting a little action with the stops and even after worse than expected European data, the euro continued to climb. This move didn’t find any followers however, but after a few tries, 1.60 finally gave in to the dollar’s strength, with the pair losing more than 150 points, down to 1.59.

Last week’s main event was Bernanke’s testimony in front of the House of Representatives, where he was once again interpreted as being negative by the already biased markets. Of course Mr. Bernanke stated that the “top priority” of the bank is to help financial institutions when in trouble and therefore his and Paulson’s rushed to bail out Fannie Mae and Freddie Mac confused the markets even further.

What started as a very negative week for the dollar and DOW JONES, ended up with both returning to positive territory as the latter broke important resistance levels of 11400. News that J. P. Morgan and Citigroup announced better than expected earnings results, gave traders renewed confidence that recession has not yet hit. Members of the FED were hawkish when it came to inflation which was clear after the FOMC minutes and showed the banks next move in hiking interest rates may happen sooner rather than later.

The EUR/USD has traded in very narrow ranges since Thursday, between 1.5760-1.59, and that is likely to continue over the next few days. A clear break of those levels could give us a clue as to the next direction it will take. For now, the daily chart shows 1.6040 is the top and will stay so for the coming weeks.

This week’s calendar is almost empty, with the most important news being the German IFO, which will be monitored closely; as last ZEW data showed very poor numbers. The fact the euro is hovering near 1.60 is not taken lightly by European officials and rumors were heard that intervention was the reason why the EUR/USD didn’t continue its move above 1.60.

Other economic events this week include the Bank of England’s minutes from their last meeting and a testimony by Mervin King in front of the Treasury Committee regarding the latest economic developments. The pound is still weak against all currencies and although we saw an upsurge in GBP/USD towards 2.00, this was due more to the dollar’s weakness than sterling’s strength. The latest economic figures from the Housing Market show further deterioration and the fact that inflationary pressures are high only makes it harder for the bank to act. On one hand, inflation means raising rates, but on the other hand the fact the economy is struggling lately makes it more complicated, and another explanatory letter regarding high inflation may be in the cards. Whatever happens, this week we may see some rather erratic moves in the pound and there is further risk of losses against all currencies.

On the US calendar front, we only have the new home sales figures, together with existing home sales. Analysts predict that those numbers will come out negative again, however the markets have already priced in the worst. A better result is more likely to give us bigger moves and therefore we may finally see the dollar strengthening across the board.

Let’s not forget one thing, currency fluctuation has become so erratic, trading sometimes feels like nothing really works; fundamental or technical. The reason is the markets are controlled by fear and uncertainty and only the big players can enjoy the action as their main goal is to hit the stops. This can be seen in oil too, as one day it climbs four dollars and the next fall’s seven or eight. It’s clear that until we see some calm in the market sentiment, this will continue, so the only thing we can do is step aside and watch for those occasional golden opportunities.

Published on  Mon, Jul 21 2008, 13:59 GMT

Further Dollar Weakness Ahead?

Mon, Jul 14 2008, 14:56 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Euro bulls were clearly in control last Friday when the EUR/USD broke important resistance levels of 1.5830 and then 1.59, making new monthly highs near the record 1.60. After the Sunday market opening, we saw more euro strength, but the move towards 1.60 faded therefore at the European opening the dollar strengthened and the EUR/USD fell towards 1.58.

What caused the dollar weakness these days? Well, what else? It’s the same old story; speculators were having a field day trying to hunt stops above 1.59 after news broke late Friday that Fannie Mae and Freddie Mac were in serious trouble due to the credit crisis, causing the dollar to suffer big losses against the euro and other currencies. The fact remained that although the news was negative for the greenback, the move from 1.5750 to 1.5950 was overdone and the reasons for it was not because traders realized the US economy is in slowdown; but because of stop hunting. The big players took the opportunity to go long on the euro from 1.5750 and extend the move towards 1.60. When the market opened on Sunday, we saw another wave of dollar sales until 1.5970, however the move did not have the energy to continue towards 1.60. It was clear from this morning’s news both the FED and the US government wanted to calm the market and pass the message that whenever a bank or a credit institution is in trouble, ‘SUPER FED’ will come to the rescue. Paulson’s message in his testimony last Thursday was clear: bug banks and institutions HAVE to be allowed to fail! On that note, stocks plummeted and the dollar was sold off. Come Monday morning and all of a sudden everything is hunky dory again. Paulson and the FED decided to take action concerning Fannie and Freddie and therefore stocks were up on the news and the same thing happened with the dollar.
EUR/USD broke support this morning at 1.5860, printing daily lows at the time of writing of 1.5840. A clear break of 1.5830 opens the door marked 1.58 and then maybe the one marked 1.5760 too - another good support level.

GBP/USD followed the dollar’s weakness too, as the pair moved higher towards level 2. This move again found limited interest and it soon faded, correcting back towards 1.98. The pound was and still is weak against the euro, especially after the latest round of disappointing economic data. This is evident in the EUR/GBP after the pair made new multi-week highs towards 0.8050.

This week the economic calendar is full of important data, starting with the FOMC minutes in the middle of the week, which will be monitored closely by the markets, in order to have an idea of the FED’s next move regarding interest rates. Analysts predict that the FED won’t hike rates just yet with the credit crisis still running and economic data still on the negative side. Apart from the minutes, we have the inflationary data with both CPI and PPI being crucial in deciding the dollars fate. If low inflation figures are printed the markets will immediately speculate the Fed won’t hike rates but instead either leave them unchanged or potentially drop them. That fact will weigh on the dollar; as recently the speculation of a possible hike was on every trader’s lips. It will also be interesting to see the numbers from the both retail sales and TICS data, which are announced later this week. The calendar is full of data which moves the greenback and if all the data disappoints then the dollar will continue to fall.

Euro bulls are in control at the moment but any economic data out of the Euro zone will certainly play a role in its direction for the next few days. German ZEW is to be announced this week and if the number comes lower than precious months, we may see a dent in the Euros strength. The fact the euro is hovering near 1.60 is not to be ignored as negative comments for the appreciation of the single currency could potentially arise once again.

One thing is certain, whatever happens in the next few days, dollar bulls have a long way to go before any sustainable strength and the fact the market is still in negative towards the US currency don’t make things any easier for the greenback.

Later this week Bernanke testifies in front of the Senate, on the subject of economic conditions and the monetary policy. Markets will monitor his speech closely for any clues as to what the bank will do in the future, but our view is he has spoken so many times in the last few weeks on a different subject each time; the FED is losing credibility with the market.

It is vital to see a change in the oil situation over the coming days too, as last Friday it broke into new record highs at 147 dollars per barrel. This occurred for geopolitical reasons such as Iran’s “war games” on Friday and also oil line disruption in Nigeria. The fact that DOW JONES went into negative territory and almost broke the psychological barrier of 11.000, added even more fuel to the speculators, who saw a chance to push the oil even higher.

Oil is up towards 1.50, EUR/USD is up towards 1.60, DOW JONES close to 11.000 and US economy still in the damps! What’s next from here? Will the dollar be able to defy all negative sentiment and find some kind of strength in the short term? Will the oil finally reach its peak? The answers to these questions are coming, but we may have to wait a while longer, especially with August just around the corner and traders getting ready to find some peace and quiet in holidays. Expect a potential consolidation until the end of August and then some real action after the holiday season finishes.

Today, things seem quiet in the currency market following New York’s opening and we suspect any moves will be muted after the busy Friday. Watch for any comments from US officials regarding Fannie and Freddie, plus any developments which occur in the banking sector.

Published on  Mon, Jul 14 2008, 15:10 GMT

Dollar Comeback! Is it Real? Will Bernanke Make it Happen?

Mon, Jul 7 2008, 11:56 GMT
by Lena Manousarides

FXGreece  |  View company's profile

What a week! The dollar bulls were clearly in control since Thursday, when Mr. Trichet indicated further rate hikes would not come into play for at least the next few months.

The two main events were the ECB rate decision and the non-farm payroll data from the US. The very fact we had these two releases at the same time on Thursday, made for difficult trading conditions and choppy trading was seen all across the board. EUR/USD made new weekly highs at 1.5910 minutes before the payroll data; however the -62000 job positions reported didn’t have a negative impact for the dollar, as most traders feared the number was set to come out far worse than that. When Mr. Trichet started his speech, EUR/USD dived more than 100 points in a few minutes, as the bank failed to deliver more hopes for rate hikes, and Trichets comments were clear for now: these rates will stay unchanged. The combination of a not-so-bad NFP number, together with a negative Trichet, made the Euro very weak against the dollar which gave dollar bulls even more excuses to buy the greenback against all other currencies.

EUR/USD broke important support levels at 1.5725, then 1.5660 and after the market opening this morning printed 1.5610, where the Euro got bid at those levels. The sentiment in the pair seems to have changed into dollar positive, for no other reason but pure Euro weakness.

This week the economic calendar seems rather empty, however the important event of the week is Bernanke’s testimony in front of the House of Representatives on Thursday, where together with Paulson he will give views on the economic outlook and more insight on what the next move by the FED will be. Analysts suggest that after the recent comments by US officials that a strong dollar is needed, we might have further verbal intervention regarding dollar strength, as the oil is due for a correction too.

Today we have the beginning of the G8, where officials from the eight richest nations are gathering in Japan to speak about world economic outlook and high oil and food prices. It will be interesting to listen for more comments regarding FX rates and if the dollar is mentioned we may see further strength in the American currency. The fact inflationary pressures are getting higher is making world leaders a little uncomfortable and therefore the FED may consider increasing its rates more than once before the end of the year.

Other important data this week is the BOE rate decision which is expected to be unchanged, however the fact that economic data disappoints every day could lead to a rate cut as soon as this Thursday. We all heard from Kings testimony in front of Parliament that inflation is soaring and growth is slowing, making the banks job especially tough to balance the two in the coming days. The pound is very weak against all currencies at the moment, especially the greenback, and a clear break in GBP/USD of 1.9580-1.96 will give us 1.9480-1.95.

EUR/USD has been trading below 1.57 since late Friday and the pair is struggling to gain momentum; signaling further losses in the pair. 1.5580 now comes in to play as good support levels and a clear break will open way for 1.5520. A correction could occur in the pair today and tomorrow towards 1.5725 but shorts can be tried there for a continuation of the downward move. Only a break of 1.58 can alter the downside scenario.

The fact that EUR/USD set a new high last week of 1.59, made a lot of traders position themselves long for the euro with a scope of 1.60. Here is another example of how market chatter and rumors work in favor of the big players, who spread the negative sentiment minutes before Trichet’s speech in order to take all the stops and then we have a relief rally of at least 300 points in the opposite direction. My question is this: has anything changed fundamentally over the last few days to support this dollar rally? No, I don’t think so. Data is still coming out negative for the dollar and oil is still hovering near record highs. We think the reason for the dollar strength has only to do with Trichet’s comments regarding rates and maybe some speculation that Bernanke may raise rates into the coming months. Also, the fact that many traders were long Euros and therefore got caught against the move on Thursday helped the dollar gain after EUR/USD liquidation took place.

Now, this week we will see if the dollar will keep up the good work and if Bernanke will paint us a nice picture of how the US economy performs. If his words are hawkish towards the economic outlook and high inflation, then the rally will continue for the greenback. Don’t forget that DOW JONES reversed all losses on Friday after it found good support at the psychological 11000 level.

So, it will be a very interesting week and although the economic data is limited, the moves could be quite big if either the G8 provide some news of FX intervention or if Bernanke gives the markets what they want.

Published on  Mon, Jul 7 2008, 11:59 GMT

What's Next for EUR/USD? Next Month Will be Crucial for Dollar's Direction…

Tue, Jul 1 2008, 10:05 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Another month is coming to its end with markets having trouble adjusting to recent economic events. First of all, June was a very important month for the European Central Bank, as it celebrated its 10th anniversary. In the ten years which have passed since the formation of the ECB in 1998, its main goal has remained unchanged: to maintain price stability in all Euro-area nations and assist its steady economic growth. Team Trichet have managed to make the European economy one of the strongest in the world by raising the interest rates slowly but surely from 2% to today’s 4%. Last year’s favorable economic data allows for further increases with a view to making the Euro one of the strongest currencies in the world, and in the last four years, the EUR/USD has appreciated considerably from 1.20 to the recent all-time high of 1.60

The month started profitably for the dollar thanks to comments from Chairman Ben Bernanke that the US economy is getting stronger, plus the high levels of inflation, something which the bank doesn’t like and will do everything in its power to avoid. These comments were taken by the markets as a FED warning that interest rates won’t get any lower, but on the contrary the bank may raise them in the coming months. This alone was enough for the dollar bulls to take over once again and send the pair down towards 1.54.

But, when we started saying that dollar is staging a comeback and more dollar strength is coming, Mr. Trichet acted and took away the entire dollar’s recent progress. The European Central Bank left its key rates unchanged in the last meeting but in the press conference that took place after the decision, Trichet was more than hawkish and his words were so powerful and unexpected; the EUR/USD experienced a big push up towards 1.57. The pair skyrocketed from 1.5370 all the way up to 1.56 as markets were caught by surprise when Trichet not only indicated no cuts were in the bank’s plans, but a raise may come as early as next month. This is not something Mr. Trichet and his pals are in a habit of doing and therefore were welcomed with Euro buying all across the board. The fact the bank said it “is in a state of heightened alertness”, in combination with higher inflation and a need of raising rates, drove the Euro bulls to push the pair towards the recent highs.

There is a lot of speculation whispered around trader’s desks that Trichet planned his words very carefully regarding future interest rate hikes, at a point when the Euro was getting slammed all across the board due to dollar strength and bad Euro zone economic data. Many say the ECB doesn’t want a weak Euro and their plan is to make the European currency the strongest in the world. Whatever the case, one thing is for sure: after Trichet’s comments, it will be very difficult for dollar bulls to take control again and despite what Bernanke said about inflation, it will take more than a few comments to restore any confidence regarding the US economic recovery.

Another factor for the dollar’s weakness can be found in the recent oil appreciation, which on Friday saw a move of eleven dollars. The oil printed new record highs due to recent Trichet comments and other geopolitical reasons. The next target for the oil seems to be $150 per barrel and if dollar continues to be sold off, we could see $150 sooner rather than later!

The fact the DOW JONES printed big losses on Friday certainly put risk aversion back in the game, and therefore we could see some selling in all yen related pairs, with USD/JPY potentially breaking lower and GBP/JPY maybe a good sell opportunity at 209 (a strong resistance level) for a move towards 205 I the next coming days. All this will depend on this week’s data and if there is further weakness in stocks.

Let’s not forget the G8 meeting that we had last weekend, where the finance ministers and central bankers gathered in Japan to discuss recent world economic developments. The conclusion of this meeting was that high inflation is affecting most world countries due to high oil and food prices. There was a lot of talk and speculation that Saudi Arabia will raise its oil production but that was later denied from Iran which said that oil production is sufficient and the reason for oil rise was purely speculative.

The EUR/USD broke important resistance levels and as long as it trades above 1.5450, it’s looking for further strength. Next resistance is at 1.5620 and a clear break puts 1.5660-1.57 as the next target for the pair, however, before the continuation of the move up, there may be a slight correction downwards to 1.54, as many Euro bulls will want to take advantage of buying on dips.

The last important economic event of this month will be next week’s Federal Reserve interest rate meeting which will definitely determine the next market move. The analysts predict that Bernanke will leave interest rates unchanged, but there is a lot of speculation that the bank will eventually raise its rates due to high inflation. The comments after the decision will play a big role in all market movements and if indeed there is a hint that rates will be raised as soon as next month, the dollar will appreciate against all currencies and therefore the stock markets will fall.

All these events affect Greece’s economy, which although has made progress in the last few months, as the latest economic data printed better than expected numbers, one thing remains certain: high oil and food prices are a great concern amongst the consumers and if that continues through the next few months it will dampen the economic outlook considerably.

Published on  Tue, Jul 1 2008, 10:09 GMT

Make or Break Time for the Dollar!

Mon, Jun 30 2008, 12:04 GMT
by Lena Manousarides

FXGreece  |  View company's profile

This week is set to be crucial for the dollars direction, as we have two very important economic events to look forward to; the ECB rate decision together with Trichet’s speech and the non-farm payroll data.

Let’s start with what happened in the markets last week, as there was a big liquidation on Thursday in all markets, with DOW JONES and NIKEI dropping more than 300 points after Citigroup and several other big companies revealed more than 7000 job reductions. The fact the US economic data was negative for the dollar together with risk aversion hitting the markets; the dollar was driven down against the Euro and carry trades deteriorated.
Last week’s big event was the FOMC rate meeting which returned unchanged as was widely expected; however the statement left traders disappointed as it didn’t deliver any hope for a rate hike in the next meeting. Markets were pricing in that after positive comments from Bernanke and co-members, the bank will be even more hawkish in its policy stance but due to bad economic data and renewed recession fears the bank failed to give a positive message. The dollar was weak after the announcement and EUR/USD pushed higher more than 100 pips in just a few minutes.

The other event of the week was carry trade liquidation, which saw EUR/JPY, GBP/JPY and USD/JPY dropping more than 200 points, following the DOW JONES. The negative sentiment is clearly back in the market. EUR/JPY made new life time highs at 169.50 but the move didn’t find any followers and the pair sold off together with all yen related pairs.

Today, Monday, is the last trading day of the month, and traders are closing their trading books for the second quarter, so volatility is expected to be high, with choppy moves likely as liquidation takes place all across the board. The yen related pairs continue the sell-off, but are rising to strong support levels, USD/JPY at 104.60, EUR/JPY at 165.60 and GBP/JPY at 209-209.30, so a consolidation from those levels might occur before renewed sell moves arise.

Today the economic calendar is quite empty, with only important economic release being Chicago PMI. Analysts predict that data could be negative, which may push the dollar lower once again.

However, all traders think about this week is Thursdays ECB rate decision, which is expected to be a hike of either 12.5 points or 25 points. The fact that Trichet was hawkish in the last meeting, leads everyone to expect a rate increase, but the level of increase is not yet clear. Many believe that the bank might just go ahead and hike 25 points and then pause for a period of time, or hike 12.5 points now and the other half in the next meeting. Whatever the outcome, the Euro will be very volatile on that day and if the bank hikes more than 12.5, we might see break up towards 1.60.

Let’s not forget though, that on the same day at same time as Trichet’s speech, we have the other big event of the week, the non-farm payroll from US. The number is expected again to be negative at -60000 for a sixth consecutive month. The recession bells might start to ring once again, as in the time of recession in the past, we have negative number for 10 consecutive months. A negative number, together with a hawkish Trichet may be the end of any dollar rally in the near term, leading to new highs in EUR/USD. The chance of a positive number is slim, as data so far suggest contraction in the economic figures and jobless claims were high in the last few weeks. It will also be interesting to watch the ISM numbers, which are expected to be worse than previous months, suggesting more dollar weakness in the coming weeks.
EUR/USD still trades within 1.5550-1.5850 and a clear break of the latter may see a move up towards 1.5900-20, potentially setting up resistance before the rest of the week’s data.
GBP/USD is trading just below the $2 level and if the data helps, it may break with 2.0050-2.0100 coming into view. From those levels the Pound could correct as the economic data will not support further appreciation. In King’s speech last week he sent the message that inflation is high and the bank needs to act in order to bring it down. However, this is easier said than done as more negative numbers are coming out daily and therefore the bank will find it difficult to hike more than once.

Let’s see how the markets will move after today’s month end and if the dollar will still manage to surpass all negative sentiment that is built over the last few days. The question will be now; which economy is performing better, Euro zone or America? I think we all know the answer, so let’s trade this information accordingly…for now anyway.

Published on  Mon, Jun 30 2008, 12:07 GMT

FX Weekly Commentary

Mon, Jun 23 2008, 11:59 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Will This Weeks FED Rate Decision Give Dollar The Long Awaited Rally?

Comment by  Lena Manousarides [ lena@fxgreece.gr ]


Another week starts with the EUR/USD falling sharply from 1.5625 all the way down to 1.55 after worse than expected IFO data from Germany. The fact that the number was lower than expected, together with PMI below the important 50 level, puts pressure on the Euro where a clear break of 1.55 would bring 1.5440 back in the game.

Last week we saw the Euro gaining all across the board, especially against the dollar and the Japanese yen, after the oil moved close to $140 per barrel. An article printed in the New York Times stated that Israel had some military activity earlier in the month which was immediately perceived as a “war rehearsal” against Iran. The news found traders buying the Swiss currency as safe haven therefore the USD/CHF fell more than 150 points, which in return made the dollar weaken against the Euro.

This week traders have one thing and one thing only on their minds: the FOMC meeting, where the dollars fate will be determined. Analysts predict that Bernanke will leave rates unchanged, but the general feeling is the statement after the decision will be hawkish due to both high inflation and comments from US officials that the dollar should be strong. However, all that is easier said than done! The question is, will Bernanke “walk the walk” after all the hawkish comments heard in the last few speeches? If the statement fails to hint at any rate hikes for the coming months, the dollar will be sold off all across the board; as the market doesn’t like it to be proved wrong! It will be very interesting to see the EUR/USD reaction afterwards and the outcome will either “make or break” the greenback.

Also this week we have Durable Goods orders which the traders will look at in order to determine the state of the economy. If the number is negative again, this will also weigh in the dollar and further weakness could be in the picture. Later on in the week, we have the GDP and new and existing home sales, which is expected to be better than last month’s figure. The latest housing data was disappointing which put further pressure on all yen related pairs, as carry traders exited their long positions and caused DOW JONES to fall more than 200 points on Friday. New fears of more US security firms declaring losses kept stocks and risky trades at low levels and this week it will be crucial to see how all these affect the FED rate decision.
EUR/USD is moving lower as from this morning and the next level to watch is 1.5480 where it may hold with good support. If the level gives way we may see further moves to the downside towards 1.5380-1.54. On the upside there is resistance at 1.56-1.5650, but a clear break of those levels puts 1.58 back in the game.
GBP/USD is trading between 1.9550-1.9750 and a clear break of those levels might give us the next direction.

The main news for the British Pound this week is the MPC meeting where King testifies in front of the Parliament for the state of the UK economy, and his plans regarding the interest rates. This speech will be very important for the pound as most analysts predict that due to high inflationary pressures, BOE could have to hike its interest rates again in the coming months. The job of King and his co-members is rather difficult as he has to manage fighting higher inflation with lower growth. It will be a question of what is more important for the economy and if the bank chooses to ignore the negative data and concentrate on high inflation, the pound may push up towards 2 in the coming months.

Let’s see though how the market will react to this week’s economic events and if Bernanke once again comes to dollars rescue with any comments due after Wednesday’s decision…

Published on  Mon, Jun 23 2008, 12:02 GMT

Dollar Comeback Proved to be False! More Weakness Ahead?

Mon, Jun 9 2008, 10:47 GMT
by Lena Manousarides

FXGreece  |  View company's profile

What a week we had last week, with EUR/USD moving like a rollercoaster form 1.56 down to 1.5370 and then all the way back up to 1.5780 where it closed Friday night at New York.

The week started profitably for the greenback, following comments from Chairman Ben Bernanke that the US economy is getting stronger and inflation is at high levels, something which the bank doesn’t like and will do everything in its power to avoid. These comments were taken from the markets as a FED warning that interest rates won’t get any lower, but on the contrary the bank may raise them in the coming months. That alone was enough for the dollar bulls to take over once again and send the pair down towards 1.54. The better than expected ISM number showed more dollar strength and we saw EUR/USD breaking the important support of 1.54 and printing new lows for the week at 1.5360.

But, when we started saying that dollar is doing a comeback and more dollar strength is coming, Mr. Trichet came back with vengeance and took away the entire dollar’s recent progress. The European Central Bank left its key rates unchanged but in the press conference that took place after the decision, Trichet was more than hawkish and his words were so powerful and unexpected, the EUR/USD experienced a big push up towards 1.57. The pair skyrocketed from 1.5370 all the way up to 1.56 as markets were caught by surprise when Trichet not only indicated no cuts were in the bank’s plans, but a raise may come as early as next month. This is something that Mr. Trichet and his pals are not in a habit of doing and therefore was welcomed with euro buying all across the board. The fact that the bank said that it “is in a state of heightened alertness”, in combination with higher inflation and a need of raising rates drove the euro bulls to push the pair towards the recent highs.

There is a lot of speculation that goes around trader’s desks that Trichet planned his words very carefully regarding future interest rate hikes, in the time when euro was getting slammed all across the board due to dollar strength and bad euro zone economic data. Many say the ECB doesn’t want a weak euro and their plan is to make the European currency the strongest in the world. Whatever the case, one thing is for sure: after Trichet’s comments, it will be very difficult for dollar bulls to take control again and despite what Bernanke said about inflation, it will take more than a few comments to restore any confidence regarding the US economic recovery.

This week the economic calendar is lighter, however some important data is coming from the US and Europe. Let’s start with today’s data, first we have the UKs PPI, which will be closely watched by the markets in order to see if there are high inflationary pressures on the UK economy. The fact that last week the bank chose to leave rates unchanged does leave room for speculation that if the inflation data continues to print higher numbers, the banks job will become very difficult and stagflation maybe unavoidable. Let’s not forget that almost all economic data out of UK continues to disappoint, with housing market numbers getting lower every week.

The other news for today is from the US; pending home sales. The forecasts predict a slightly better number this month, but if the data disappoints, we may see further dollar weakness.

In the next coming days we have trade balance, retail sales and CPI data out of the US. All these will be monitored closely by the markets, especially the inflation data, for any indication of what FED will do in the next coming weeks. Let’s not forget a speech by Bernanke’s this week in Massachusetts regarding inflation which will be very interesting to hear.

Another factor for the dollar’s weakness can be found in the recent oil appreciation, which on Friday we saw a move of 11 dollars. The oil printed new record highs due to recent Trichet comments and other geopolitical reasons. Next target for the oil seems to be $150 per barrel and if dollar continues to be sold off we could see $150 sooner rather than later!

The EUR/USD broke important resistance levels and as long as it trades above 1.5450, it’s looking for further strength. Next resistance is at 1.5820 and a clear break puts 1.5860-70 as the next target for the pair. However, before the continuation of the move up, there may be a slight correction downwards to 1.57, as many euro bulls will want to take advantage of buying on dips.

The fact the DOW JONES printed big losses on Friday certainly put risk aversion back in the game, and therefore we could see some selling in all yen related pairs, with USD/JPY potentially breaking lower and GBP/JPY maybe a good sell opportunity at 209(a strong resistance level) for a move towards 205 I the next coming days. All that will depend on this week’s data and if there is further weakness in stocks.

Let’s see what this week will bring us and how the traders will react to the releases. The market sentiment is back to dollar negative, which may stay for a while, especially if the US data continues to disappoint. Also, it will be wise to monitor the oil moves this week, as the correlation of EUR/USD to oil is very close and if the latter starts to correct from recent new highs, it will weigh on EUR/USDs recent strength…

Published on  Mon, Jun 9 2008, 10:51 GMT

This week's data will determine dollars fate! 1.50 Or 1.60 next target for EUR/USD?

Mon, Jun 2 2008, 11:14 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Another week has started, with the economic calendar full of important releases. This week will definitely give us some idea regarding the dollar direction and most importantly if EUR/USD is heading again towards recent highs…

Let’s start with what happened last week, as we had a new profound dollar rally that lasted most of the days till Fridays close. The news from US was all positive for the dollar, with durable goods orders, GDP and new home sales printing better than expected numbers. This caused dollar to appreciate against most of the currencies and especially the euro. EUR/USD broke important support levels of 1.55 and printed new daily low at 1.5450.
One other reason for dollars rally was due to the oil drop from $133 per barrel to 125. The move was seen as a liquidation of long positions due to comments from many officials that oil prices are getting out of hand and something must be done to stop this. Although crude oil inventories were much lower than expected, oil still dropped dramatically after comments from OPEC officials stated that there might be an increase in oil after a few months.

The question now is whets next for the dollar? Will this week be dollar positive or will it put dollar bulls back on the defensive?
Well, the economic news out of US are many, with ISM Manufacturing and non manufacturing due out today and in the next few days. These numbers are vital for the state of the US economy and analysts predict that both will come out lower once again. However if there is a surprise to the upside and we have better than expected data, that will support the greenback and we might see further positive moves.

Traders will be very wary this week though, as Thursday and Friday are very crucial for all markets. On Thursday we have the ECB rate decision, which is expected to leave the rates unchanged. Later that day, TrIchet is speaking in front of the journalists and we expect a lot of volatility during his speech. The sentiment generally amongst traders is that Mr. Trichet and co will be hawkish once again, even though some economic data disappointed lately. Comments last week of the IFO president gave fuel to all the rate hike speculations, as he said that there is need for rates to be raised and no prospect for rate cuts in the horizon.
In the same day we have the Bank of England decision, which is expected to leave rates unchanged. There are some analysts who are forecasting that BOE might hike rates too in the coming months, as inflation is getting out of hand. After the latest speech by Mervin King, the banks president, it was clear that a letter to the government might be written in order to explain the high inflation numbers. However, the fact that the economic data is coming out negative over the last few weeks, together with recent problems in Bradford and Bingley-one of the largest mortgage lenders in the country, weighs in the pound and there is not a clear view as to what the bank will do. One thing is for sure: if the economic data continue to disappoint and further slowdown in the housing market evolves, then BOE might have to bite the bullet and cut.
The big event of this week is Nonfarm payrolls on Friday. The fact that this economic release comes out in the same week as ECB and BOE rate decision will make trading very dangerous, and traders might exit their positions ahead of the data, as the risk will be bigger than normal. The forecasts for the NFP number want a negative outcome of -50000. The very fact that this will be the fifth consecutive negative month sparks new recession fears, as the last recession of the country saw 10 consecutive negative months. This will definitely have a negative impact in the dollar and is we have a worst than expected number of -100000 we might see EUR/USD rally back towards recent record highs!

EUR/USD has started this week on a positive note and if it manages to break important resistance of 1.5630 then 1.5680 -1.57 seems the next possible target. To the downside, only a clear break of 1.5470 opens way towards 1.5380-1.54. The most possible scenario might be that the pair will trade between 1.5450-1.5650 ranges before any important events come later in the week.

GBP/USD is looking very weak and a break of 1.96 might open way towards 1.9530 where a good support can be found. We think that if the economic data continues to disappoint, the pound might drop further, but traders will be wary of Thursday’s rate decision before they decide to breakout of recent 1.96-1.98 ranges.

Let’s see how the currencies will behave this week and what the trader’s reactions to the big important news will be. The market sentiment at the moment is back to risk aversion, and carry trades continue to fall, due to the subprime mortgage which still dominates the trader’s moves. It will be interesting to hear what the Japanese officials say after the BOJ rate decision also due out this week. If there are comments that the bank might need to raise rates, the yen will appreciate further…

Published on  Mon, Jun 2 2008, 11:15 GMT

What's next for the dollar? Will this week's data support further gains for the greenback?

Tue, May 27 2008, 13:14 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Another week is starting, with US and UK markets close on Monday due to holiday. The activity in the currency markets was very small, with thin liquidity the main event of the day.

EUR/USD consolidated within a 50 points range, hitting 1.5790 high and 1.5740 low as traders were enjoying the day away from their screens.

Last week we saw a lot of dollar weakness almost daily, what with economic data out of the US being negative and Euro zones data coming out much better than expected. Let’s not forget that German IFO was above expectations and that together with hawkish ECB comments about inflation gave euro some strength. Many officials from Europe, including IFO Chief, said that they agree with the recent remarks from ECB and they think that the next move by the bank should be a rate hike. That comment alone gave euro a push towards 1.58. The fact that more comments out of Europe support a rate hike an give a rate cut no chance, that certainly put euro back to its recent positive bias.

But let’s see what we have this week and how the events of the day will influence the currencies…

Today the only important economic release is due later this afternoon from the US and it’s the new home sales. Most forecasts expect this number s to come lower for another month and if that happens then we might see further sales in the greenback. The reason why the dollar is weakening against all major currencies is mainly fear for further deterioration in the US economy even after the hawkish comments from the FED officials last week. The fact that most analysts predict that Bernanke and co will keep interest rates unchanged, is giving the dollar some boost but it’s not enough to let the currency enjoy its recent strength towards 1.51.

Later this week we have more important data out, with durable orders being one and GDP being the other. Both news are important for the greenback and if we see further signs of slowing in the economy, then that would ultimately mean more weakness in the dollar.

EUR/USD hit 1.5820 early this morning but the move didn’t find any further support and therefore it went all back down to test important support at 1.5725. The Euros fall was supported by negative economic data out of Germany and some rumors that were going around the wires that major European banks will announce losses due to the subprime mortgage crisis.

So, let’s see how markets will react this week and how will the data influence the dollar in the coming days…

Whatever happens this week, one thing is for sure: with oil a=again above $133 per barrel and further negative data out of the US, dollar will struggle to gain momentum and therefore we might see EUR/USD back towards recent highs at 1.60…

Published on  Tue, May 27 2008, 13:18 GMT

Is Dollar Ready to Collapse? FED Will Decide that in Tomorrow's Meeting...

Mon, Mar 17 2008, 12:26 GMT
by Lena Manousarides

FXGreece  |  View company's profile

EUR/USD hit another all time high at 1.5910 during this morning’s Asian session. The move was aggressive with stops being hit all across the board and carry trades being liquidated at a fast pace.

Last week we had plenty of action in all financial markets, with DOW JONES dropping hundreds of points and crude oil reaching 112. Dollar was clearly in the dumps all week and this is likely to continue at least until the FED meeting which takes place tomorrow.

The fear and uncertainty of investors is still visible and every time something happens in the markets, all carry trades get hit hard. Traders are clearly afraid to buy in the dips and until we have a clear signal that the recent crisis is finishing, yen will be the clear winner amongst currencies. Many speculate that Bank of Japan, might act to prevent further gains in their currency but with G7 being hosted in Tokyo this year that would be almost impossible for them to intervene.

The big news on Friday that the 5th largest securities firm Bear Stearns was in big trouble and very close to bankruptcy was taken badly from all market participants and we saw a large sell off being progressing in all markets.

Today markets were caught unaware, as rumours of emergency weekend meeting by the FED rate were actually true, with discount rate now being at 3.25. FED was scheduled to meet tomorrow and decide the future of interest rates; however with the Bear Stearns crisis the bank decided to act immediately. The move was followed by heavy dollar selling which placed EUR/USD at 1.59 in early hours.
Today we have TICS data out of the US and although is expected to be slightly better than last month, it is widely expected to print a negative number as most foreign investors clearly don’t support the US dollar. However whatever the number, the markets sentiment is so negative that won’t make a difference in the greenback. Also later this evening we have the NAHB housing market index which is expected to be unchanged.

EUR/USD is consolidating from earlier highs, but clearly still in an uptrend. Another leg up is expected until the recent top at 1.59 and a clear break of that level puts 1.60 in the game.

The question now is how high can the pair go in the coming days? The answer can be found in tomorrow’s FED meeting and if we see Bernanke cutting rates by more than 75 points then dollar will be collapsing to new lows. It is clear that banks priority is not to have a strong currency, but many are surprised at how low the US dollar had been in the last few days. Many analysts believe that an intervention of some short is coming at some point; however that point might be 1.60-1.63. Therefore until we see a clear reversal sign or a verbal intervention by government or other, is best either to be out of dollar positions or short the dollar with tight stops.

Let’s see how the markets react today and if the US opening sees further dollar selling before tomorrow’s meeting...

Published on  Mon, Mar 17 2008, 12:27 GMT

IFO Gave Euro A Push Towards 1.49. What Next?

Tue, Feb 26 2008, 11:29 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Another day another hit for the dollar, with EUR/USD reaching yet another new weekly high well above 1.4850 after better IFO news probed a break of important resistance level 1.4850.

This morning there were rumours circulating the wires, that German IFO will print much lower than expected number and therefore we witnessed a selloff in the pair. The break of 1.4790 though was proved to be false after a brief low was printed at 1.4777. The move retraced aggressively though after the news showed that German economy is resilient to the recent economic crisis that US is facing. It makes us think why these rumours always tend to be wrong...

EUR/USD broke resistance of 1.4850 and at the time of writing the pair is at 1.4872. Next resistance lies at 1.4880 and a clear break will bring 1.49 back in the game. Small shorts can be tried at 1.4900-20 as the move was violent and a retracement can be expected ahead of the PPI news out of US later.

GBP/USD broke 1.97 levels and a clear break of 1.9730 will bring 1.9780.

Later today we have PPI out of the US which traders will monitor closely after the better than expected CPI data last week. Speculations for further cuts will come back into traders’ minds as tomorrow we have Bernanke’s testimony in front of the Congress. If the data is worse than expected then another leg up might be seen in EUR/USD.

Let’s not forget consumer confidence out of the US today which is expected to print a much lower number and that is natural as the consumer has low opinion about the economy what with the recent economic crisis still very much alive. This number however is important for measuring the next retail sales index and we see a bad number, then chances are that next retail sales will be low too.

It will be interesting to see what the stocks will do today after the New York opening and how the DOW JONES will move. Yesterday we saw gains in the index and that was mainly due to not so bad existing home sales and the general notion that the rescue plan that the US government is thinking of applying will help Banks to stabilize losses.

Also watch out for the oil as it is once again close to $100 a barrel and that will affect dollars short term future too...

Today things are getting tough for dollar bulls and many traders are waiting for Bernanke’s testimony before committing either way...

Published on  Tue, Feb 26 2008, 11:30 GMT

Is EUR/USD On The Way To 1.50?

Mon, Feb 25 2008, 09:23 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Another week has started with dollar still on the defensive, after last week’s very bad economic data and further speculations that America is heading for recession.

EUR/USD closed last week well above 1.48 and that is certainly not good news for dollar bulls. If this week’s data are still negative, the pair might be heading for 1.49 ahead of 1.4965 which was the record high.

Today the only important economic release is existing home sales and traders will be monitoring this closely in order to asses if the problems in the housing sector are still visible.

This week has a few important economic indicators starting tomorrow with PPI out of the US which will be watched closely by the markets after the high CPI numbers we had last week. Many speculate that FED will cut rates again in the next meeting after Bernanke’s testimony regarding the economic problems.

Also we have durable orders in the coming days, which are forecasted to print a negative number and consumer confidence which again is awaited to be on the negative side.

The big event of the week though will be the testimony by Bernanke in front of the Congress, in which he will answer questions regarding his latest moves in the interest rates and also the problems which aroused due to the subprime mortgage. It will be very interesting to see how the markets will react in this speech ad what that would mean for the already weak dollar.

Don’t forget that tomorrow we have the German IFO out and this is very important for the latest euro rally which can be stopped if the number is much lower than expected. The fact that European officials are still hawkish in their tone regarding inflation and Trichet himself has said over the last weeks that inflation is more important than growth at the moment, is giving the European currency strength against most of its other counterparts, but that can easily change if economic data come out weaker than last months.

EUR/USD is still holding above 1.48, and a clear break of 1.4850 will open the way to 1.49 ahead of 1.4920. On the downside, a clear break of 1.48 might send the pair down to 1.4660.

GBP/USD is trading just above 1.96 but long positions can be tried at 1.9585 for at least 1.97 which is the last Friday’s tops.

USD/JPY is trading above 107 and shorts can be tried at 107.55-60 for testing last Friday’s bottom at 106.85

Let’s see how the currencies will behave today, as it is the first day of the week and how will traders position themselves for the big events this week...

Published on  Mon, Feb 25 2008, 09:24 GMT

ECB and BOE Will Determine Dollar Fate After The Recent Rally...

Wed, Feb 6 2008, 14:10 GMT
by Lena Manousarides

FXGreece  |  View company's profile

What a day we had yesterday, with EUR/USD taking a “dive” against all odds, and breaking important support levels in a matter of few minutes. The pair started at 1.4830 and printed a daily low just above 1.46. The move was aggressive and was attributed mainly in the falling DOW JONES and bad European economic data.

Euro zone has started printing its first negative numbers in a long time, with both PMI and retails sales coming out unexpectedly low. Investors were caught off guard as the bad economic data was only coming out of the US till now.

However after US printed a very low ISM below the psychological 50, the recession bells started to ring again and the stock market along with carry trades plummeted once again, giving dollar the bizarre rise. All traders were wondering why dollar was bid all across the board after the bad data, but the answer is simple: Everyone is aware now that US economy is going through a difficult period to say the least and the worse is expected. Traders were selling the euro like it was going out of fashion and therefore EUR/USD continued its recent fall.

Today the picture is the same for the European currency and still we see that euro is weak against the dollar, with the pair not being able to move further up towards 1.47. As long as it holds 1.4680, pair is good for further fall towards 1.4530.

The economic calendar is almost empty with unit labor costs the only release out of US.

Traders will be positioning themselves for tomorrow’s important events, the BOE and ECB rate announcements. The Bank of England is widely expected to cut the rates by 25 bps and this is priced in the markets since last week. The latest economic data show slowing in the economy and worries of subprime mortgage effects in the UK economy are starting to show. Analysts predict that the Bank might continue easing the rates in the coming months and therefore the pound might suffer more against its other counterparts.

GBP/USD is trading within tight range today and after the big move yesterday there are many fake signals which show the uncertainty of the traders ahead of tomorrow’s meeting. A clear break of 1.9560 might put 1.9530 back in the picture.

EUR/USD is trading still in a downward trend and clear break of 1.9590 will expose stops, eventually taking the rate down towards 1.9550 ahead of 1.95. Tomorrow’s interview by Trichet will make or break euro as many believe that his words will be dovish maybe signaling a rate cut in the coming months, following the lead of FED and BOE. The data out of Euro zone showed yesterday that the economy is starting to suffer what with the strong euro and the subprime woes being the main catalysts. However, if Trichet continue to stand by his decision not to cut but even maybe rise later on in the year, euro will climb up against the dollar and 1.50 might come back in play.

All will be confirmed tomorrow as we have a very important day full of events that either will make or break the recent dollar rally…

Published on  Wed, Feb 6 2008, 16:27 GMT

FOMC Outcome Might Determine Dollars Future!

Wed, Jan 30 2008, 14:27 GMT
by Lena Manousarides

FXGreece  |  View company's profile

The big day has finally arrived with FOMC meeting being the main hot event for all global markets.

 

        Yesterday, we had durable goods orders out of US, printing a better number and therefore giving greenback a bid, taking EUR/USD down towards 1.47. The pair struggles to move either way, moving within tight range of 1.4735-1.4790.

 

        Today we have ADP report coming out, which will eventually give us an idea of how the non farm payrolls will be this Friday, with current analysts estimations giving it a worse than previous number of only 65.000 new jobs. The ADP report is giving a 40000 number which can weigh on the dollar in the already negative market sentiment. The other economic data is GDP which again is predicted to print a lower number which again might give more reasons for selling the dollar ahead of tonight’s meeting.

 

        EUR/USD just broke 1.48 level and it looks good to test 1.4825, however traders are not willing to take positions before the news.

 

        GBP/USD again is trading within tight range of 1.9875-1.9925 and a clear break of the latter level might take the pair towards the psychological 2. We do see resilience in the pound at the moment, as the latest data were not good for the English currency. Analysts predict that BOE will give us more cuts in the coming months; however it will be vital to see what the inflation numbers will be in the coming days.

 

        The big event of the day, the FMOC meeting will give us the next big move and as the forecasts predict a cut of 25 points, any surprise either way might cause a chaos in the already shaken markets. All market participants have already priced in another cut, but after the sudden move by Bernanke last week to cut rates by 75 points, have made the bank to seem less reliable and traders clearly have lost faith in the whole monetary policy. Many are saying that the move by the FED to keep cutting rates have come little too late as the damage in the economy has already happened. Whatever the outcome one thing is for sure, dollar will be the main winner or looser and the latter seems more probable.

 

        So, keep your eyes and ears open today and wait for market “turbulence” just before and right after the announcement.

 

        EUR/USD has a potential to meet 1.50 in the coming days if data continue to disappoint, however the upside move might be contained if DOW JONES and the rest of the markets plummet after the FOMC…

Published on  Wed, Jan 30 2008, 14:29 GMT

FOMC Outcome Might Determine Dollars Future!

Wed, Jan 30 2008, 11:47 GMT
by Lena Manousarides

FXGreece  |  View company's profile

The big day has finally arrived with FOMC meeting being the main hot event for all global markets.

Yesterday, we had durable goods orders out of US, printing a better number and therefore giving greenback a bid, taking EUR/USD down towards 1.47. The pair struggles to move either way, moving within tight range of 1.4735-1.4790.

Today we have ADP report coming out, which will eventually give us an idea of how the non farm payrolls will be this Friday, with current analysts estimations giving it a worse than previous number of only 65.000 new jobs. The ADP report is giving a 40000 number which can weigh on the dollar in the already negative market sentiment. The other economic data is GDP which again is predicted to print a lower number which again might give more reasons for selling the dollar ahead of tonight’s meeting.

EUR/USD just broke 1.48 level and it looks good to test 1.4825, however traders are not willing to take positions before the news.

GBP/USD again is trading within tight range of 1.9875-1.9925 and a clear break of the latter level might take the pair towards the psychological 2. We do see resilience in the pound at the moment, as the latest data were not good for the English currency. Analysts predict that BOE will give us more cuts in the coming months; however it will be vital to see what the inflation numbers will be in the coming days.

The big event of the day, the FMOC meeting will give us the next big move and as the forecasts predict a cut of 25 points, any surprise either way might cause a chaos in the already shaken markets. All market participants have already priced in another cut, but after the sudden move by Bernanke last week to cut rates by 75 points, have made the bank to seem less reliable and traders clearly have lost faith in the whole monetary policy. Many are saying that the move by the FED to keep cutting rates have come little too late as the damage in the economy has already happened. Whatever the outcome one thing is for sure, dollar will be the main winner or looser and the latter seems more probable.

So, keep your eyes and ears open today and wait for market “turbulence” just before and right after the announcement.

EUR/USD has a potential to meet 1.50 in the coming days if data continue to disappoint, however the upside move might be contained if DOW JONES and the rest of the markets plummet after the FOMC…

Published on  Wed, Jan 30 2008, 14:30 GMT

Will Dollar Manage To Gain Further Ahead of Next FOMC Meeting?

Fri, Jan 18 2008, 14:59 GMT
by Lena Manousarides

FXGreece  |  View company's profile

As we the week comes to end, the only big mover today has been the sterling once again but this time to the downside, with GBP/USD dropping 130 points in a few minutes after the retail sales release.

The pair printed a daily high at 1.9724 but was unable to hold on to its gains, what with retail sales printing a low number since January 2007. Many traders secretly believed that due to strong retail sales this December, the number would come out better than expected and therefore bought sterling ahead of the release. However the pound collapsed with the pair falling as low as 1.9560 where it found good support. The analysts now predict that BOE will keep easing the rates and some even speculate that if the economic data continue at this manner, we might see 4% at the end of this year. All hopes for the 2 level were crushed and now 1.9525 seems like the next possible target, ahead of 1.9480.

Apart from that, today it has been a slightly quiet day, with EUR/USD making a move above 1.4690 but was again unable to hold the level as dollar bulls took control once again.

The lack of economic data out of the US might keep EUR/USD in tight range between 1.46-1.47, however a clear break of 1.4590 might put 1.4525 as the next short term target.

Yesterday, US data disappointed once again, with Philly FED printing -20 instead of -1, which took the euro above 1.47. Traders were waiting for Bernanke for more clues as to what the bank will do regarding the next meeting and they indeed received their answer, as he basically implied that due to the fact that the economy is not performing well, the bank might act with more cuts in the near future. All carry trades got sold off, and DOW JONES lost more than 300 points.The recession scenarios are stronger than ever and that makes trading in risky positions quite fragile.

Next week the economic calendar is almost empty from the US, with existing home sales being the only important news. That alone might give the chance for currencies to consolidate as the last week of January we have all shorts of important economic data, starting with FOMC rate decision, durable orders, non farm payrolls and many many more.

Let’s see how the currencies will behave towards the New York close and if GBP/USD manages to close the week below 1.96. and EUR/USD below 1.46…

Published on  Fri, Jan 18 2008, 15:00 GMT

EUR/USD Collapsed From Recent Highs. Is 1.45 Next Target?

Thu, Jan 17 2008, 10:56 GMT
by Lena Manousarides

FXGreece  |  View company's profile

What a day yesterday that was, with EUR/USD collapsing from 1.4820 all the way down to 1.4590 in only a matter of few minutes!
The move was violent and stops got hit with traders exiting their long euro positions in fear of further fall in the pair.

What caused this crazy move? Well initially what sparked the sell off in the pair were comments from ECB Mersch regarding the state of the European economy. In his interview he implied that the bank has to rethink its monetary policy and maybe start easing rates due to the disappointing economic data and also the fact that the recent financial crisis in the markets has put enough pressure. Also he stated that ECB will revise to the downside the economic growth and that made investors panic with the sell off in the pair being abrupt and fast.

EUR/USD is trading now just above 1.46 and a clear break of 1.4580 will put 1.4525 as the next possible target. However yesterdays move was so big that a consolidation up towards 1.47 cannot be ruled out.

Yesterday’s inflation data from US showed that CPI didn’t fall as much as expected and the core number was unchanged. That of course gave more fuel to dollar strength as many traders were disappointed, as they already were pricing in a 50 or even 75 pbs cut next week. The TICS data also came higher and generally the dollar sentiment was more positive which helped dollar bulls no end.

Today is an interesting day as we have more housing data out of the US with housing starts and building permits being the first releases out. The forecasts are negative once again and that can weigh in the greenback, however a slightly better number will definitely help easing the fears of the sub prime crisis.

The most important event though is Bernankes testimony later today, which traders will monitor closely for clues as to what the FED will do in a few days. Many analysts forecast a cut but it will be important now for us to evaluate by how much will the bank cut?

GBP/USD made an impressive move today, printing 1.9715 daily high at the moment of writing, however only a clear break of 1.9740 can give us scope for further gains towards 1.98-25. The later level seems a good level to short with stops above 1.9860.

EUR/USD is trading heavily after the London opening and today’s trend so far seems to be on the downside, with 1.45 getting closer. However, beware that euro bulls will seize this moment and maybe try to re enter their longs with 1.50 still a target in the next few weeks.

Let’s see how the markets will react with today’s events and also what Bernanke will have to say about the American economy and if his comments imply that recession is possible…

Published on  Thu, Jan 17 2008, 10:57 GMT

Dollar Gets A Lift From Risk Aversion! Can it last?

Wed, Jan 16 2008, 10:59 GMT
by Lena Manousarides

FXGreece  |  View company's profile

The greenback managed to reverse all of its losses and even make new highs against the euro in an unexpected big move late last night…

 
        What caused this move though wasn’t euro weakness as much, but risk aversion and DOW JONES plummeting to new lows. Markets are clearly contemplating the state of the American economy and with the yesterday’s data coming out extremely negative, with retail sales printing a bad number the same with PPI.

 
        EUR/USD made a brief upward move above 1.49 but didn’t manage to sustain its gains or break even higher and gave it all back later in the day. GBP/USD managed to make it briefly above 1.97 but move was retraced too, making it hard for the pair to trade above 1.96.

 
        For today, watch out 1.4860 for EUR/USD as a break of that level will put 1.49 back in track and more euro gains to come. Also on the downside 1.48 is very important and then 1.4770. A break of the later level will put 1.4740-very strong support level, as next target

 
        Market sentiment at the moment is low, with the fear and uncertainty back in everyone’s minds. With carry trades clearly in the damps, and investors liquidating their short yen positions, the next target for USD/JPY would easily be 105 and GBP/JPY 206. As for the beloved EUR/JPY, the story gets even more intriguing. After the pair broke the very important support level of 158.80 it made an impressive dive hitting stops and finally printing a multi month low at 157 which stands at the time of writing. The main reason for euros weakness can be found in EYR/JPY alone and the more the pair falls, the more chances EUR/USD has to plummet too. Next target for the pair would be 156.60 which is a strong support level and a possible break would put more pressure in the pair.

 

        Today’s data are very important what with US CPI and TICS being the first ones to be announced. Also later in the day we have NAHB Housing Index and also the Fed Beige Book. All data will be monitored closely by the markets, especially the inflation data as FED rate decision will be announced in a few days.

 
        We believe that the current market conditions  does not reflect  the real sentiment as dollar has not so many reasons to be strong, what with all data being bad and more are awaited to be even worse. The analysts predict that if the economic crisis continues, and if more banks print losses due to sub prime turmoil, recession might be unavoidable and therefore more liquidation might occur.

 
         All carry related trades got hit these days and with Bernanke being so dovish regarding rates, we might see more losses to come. Don’t forget that BOJ has not commented recently regarding yen strength, something which if it happened 3 years ago we probably would have an intervention by now. The current silence means though that maybe the bank has changed its stance and doesn’t think that yens strength can harm the economy.

 
        Les wait and see what the day brings and if today’s CPI prints a very low number then it won’t be a question of IF Bernanke cuts next time but by how much…

Published on  Wed, Jan 16 2008, 11:23 GMT

New Year Starts With Dollar Weakness!

Mon, Jan 7 2008, 10:16 GMT
by Lena Manousarides

FXGreece  |  View company's profile

First of all, Happy New Year to everyone, especially to those euro bulls who witnessed a great start to the New Year with the European currency regaining strength after two weeks of selling off.

So, 2007 has gone and we start 2008 with the dear old greenback getting hammered once again and break important resistance levels, such as 1.4775 and then 1.48, to finally print a one month high for the EUR/USD at 1.4825. With market players back from their holidays complete with turkey-fuelled appetites for more trading action, considerable volatility was witnessed all across the board.

Traders were waiting for several US releases; ISM Manufacturing, ISM Non Manufacturing, Factory Orders and FOMC minutes, as all these could be seen as the starter on the economic data menu, with Non Farm Payrolls on Friday being the main course and main driver for the big dollar sell off against its major counterparts.

Although the results of all this US data were mixed and FOMC minutes relatively dovish, the dollar managed to survive a fall against the euro and remained near 1.47 until the release of US Non Farm Payrolls. Many analysts predicted a low number on payroll data and a negative sentiment began to take hold. This was thanks to the negative ADP report, as the two often correlate. Market players didn’t want to commit either way.

However, when data was released and the market saw an even lower number of only 17000 plus a higher unemployment rate at 5% from the previous month instead, dollar bears gained control again and drove the EUR/USD pair towards 1.4850, a very important psychological level.

Another big mover this week has been the Yen which managed to gain from technical trading, together with some comments of Japanese officials regarding future rate hikes which they see happening during this year. However the main reason why all carry trades collapsed was new fears of sub prime mortgage mounting once again after most of the economic data out of the US disappointed to say the least. Lets not forget the ISM Manufacturing number which was lowest than psychological 50 and also the Housing data which printed really bad numbers. All that made traders exit their risky positions and buy the yen back, making GBP/JPY loosing more than 1000 points and USD/JPY diving below 108. As EUR/JPY approached highs at 165 in the recent weeks, we finally saw some unwind, with the pair dropping almost 400 points.

With a new week starting and a less busy calendar from the US, we are concentrating on Trade Balance for the month of November as well as ECB rate decision complete with Trichet s speech and the BOE rate decision. The question now is will the dollar finally manage to stage a comeback in the coming weeks and head towards 1.45, or will new Euro buyers emerge trying to have another go at 1.4967?

It is very important to state that the better figures we get out of the US the more confident the market feels buying the greenback again, so if we see surprises to the upside in the forthcoming releases we could witness another greenback rally. Furthermore, lets not forget that traditionally the month of January is supportive for the dollar as most investors are squaring up their last year positions and preparing their New Year targets. So, don’t be surprised if we see the new found dollar strength continuing, providing that the economic releases allow this.

Get ready for another trading week then, with more opportunities unfolding. Watch out for Mr Trichets speech which may once again indicate that the bank is ready to act in order to fight inflation no matter the fact that euro is threatening to climb towards 1.50. Also it will be interesting to watch how the Fed reacts to the latest bad releases in Payrolls and ISM. Will they decide to cut rates in the next meeting at the end of the month as much as 50 pbs in order to stabilize the recent negative performance in global markets, or adopt a wait and see attitude until more evidence of slowing in the economy arise? Only time and data will tell.

Watch out for this week as it might give us good trading opportunities and don’t forget that with fear and uncertainty still alive in traders minds regarding the state of the economy, we might see further risk aversion in all yen related pairs…

Published on  Mon, Jan 7 2008, 12:04 GMT

Will 2008 Be a Turning Point For The Dollar?

Fri, Dec 28 2007, 15:18 GMT
by Lena Manousarides

FXGreece  |  View company's profile

A few more days till the end of the year and dollar is still under pressure against most of its other counterparts.

EUR/USD broke 1.4570 important resistance, and hasn’t looked back since then, printing a new high by the minute. At the time of writing the pair is just above 1.47 after 1.4680 was taken out easily. Under normal market conditions the pair would meet bigger resistance touching these levels, however the fact that its still holidays for many traders and therefore the liquidity is very thin, gives euro bulls the upper hand to put further strength in the European currency. Also, the geopolitical events which are unfolding these days after the murder of Benazir Bhutto is weighing on the dollar and this time flight to safety sees a lot of Swiss franc buying and also euro too.

The economic data out of the US yesterday, gave us worse than expected durable orders which didn’t do dollar any favors and gave the green light for further selling in the pair.

Today the only economic data are Chicago PMI and New Home Sales out of the US and both are expected to be lower than previous months. Of course with the already negative dollar sentiment still priced in the markets, any bad news is welcomed with a sell off in all dollar related pairs.

EUR/USD didn’t manage to break 1.4710 so far and now pair has consolidated since then down to 1.4665. As long as pair is above 1.4630 there is further room for upside moves towards 1.4750.

GBP/USD is struggling to gain even though it made it briefly just above 2 marking daily high at 2.0020. The pair has corrected since then and tested important support level at 1.9935. The pound is suffering from heavy selling against the euro, as EUR/GBP saw new lifetime highs today above 0.7360. Next level to watch for the pair is 0.7385 ahead of 0.74.

At the beginning of next week the markets are half operating therefore we might see thin trading conditions all across the board. Beware however for the 31st of December, the official last trading day of the year, as only a few players will be participating in the markets making trading quite volatile. The dollar might continue to be under pressure as more economic data might show further slowing in the economy, however come January and we might see the greenback strengthening again especially against the euro, as historically the first month of the year starts with dollar strength!

2007 had really been a year to remember what with euro almost hitting 1.50, pound well above 2 and economic crisis in the eyes of sub prime mortgage caused a market turmoil forcing the FED to cut rates abruptly.

We have seen it all, dollar weakening exceptionally, risk aversion causing carry trades to drop 1000 points in one day, stocks falling like there was no tomorrow, oil just a few cents below 100 and a Canadian dollar below parity!

The question is now, what will 2008 bring us? Will EUR/USD touch 1.50 and even go towards 1.60 as many analysts rushed to predict? Will indeed oil surpass 100 and trade above?

All will be answered in the New Year which starts in a few days and certainly will give us many new events and excitement to keep us trading…

Published on  Fri, Dec 28 2007, 15:18 GMT

Will EUR/USD Manage To Regain Its Recent Losses?

Thu, Dec 27 2007, 14:04 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Christmas day came and gone, with currencies not doing much for these days as most traders were enjoying the festivities! EUR/USD is trading with a light tone since Friday, where the 1.43 level was not taken out after many attempts. This level is working now as good resistance and only a good and clear break of this level can give us scope for 1.41 in the coming weeks.

The economic calendar was empty these days, however today there are a few releases that traders will want to monitor out of the US. First of all we have durable orders, which are forecasted to come out better than the previous month and if that happens might give dollar a lift in the short term. Also we have consumer confidence which is expected to come out bad as the confidence in the American economy is still fragile and low.

The currencies today are trading within tight ranges, however all the yen related pairs seem to be on fire! USD/JPY broke finally the 114.50 important resistance and so did EUR/JPY at 166.15. We see that the combination of slightly dovish monetary policy minutes by BOJ, as well as bad economic data weighs on the Japanese currency and carry traders are clearly back for more pips ahead of the year end.

GBP/USD is correcting today and yesterday from oversold levels of 1.9770 which although tried to break didn’t manage and the pair rebounded from that. Next short term target might be 1.9935 and then important resistance at 1.9980-00 which can be used for short positions. The pound still is weak and you can see that clearly from EUR/GBP which has done a remarkable performance and printed lifetime highs above 0.73. Next target for the pair seems to be 0.7350 where there is good resistance and a break out of that level can open way to 0.7380-90. Shorting the pair is a bit dangerous at the moment, however for fast pips it could be tried firstly at 0.7350 and then 0.7385.

EUR/USD is trading very thinly at the moment and it can barely move above 1.4520. A clear break of that level opens way for 1.4550 firstly (a quick short position can be perhaps tried) and then 1.4570-80 which is very good resistance and ideal for dollar bulls to try shorting the pair. As long as the pair trades under 1.46, the downtrend which started last few weeks remains intact and 1.41 in the coming weeks seems realistic, however a clear break of 1.4650 starts to ring bells and its dangerous for shorting the pair. 1.4750 if reached then puts the whole 1.41 dollar correction out of sight and then we have further move up towards recent highs!

Let’s see how the rest of the day progress and how the dollar will react to the news which is out soon…

Published on  Thu, Dec 27 2007, 14:05 GMT

Will Dollar Gain Further Until the Year End?

Fri, Dec 21 2007, 13:58 GMT
by Lena Manousarides

FXGreece  |  View company's profile

As today is the last day of the week and the last day before Christmas, it will be very interesting to see how the currencies will behave ahead of the holidays.

Yesterday, GBP/USD continued its downward move breaking important support levels, only to find a temporary stop at 1.9810. The pound seems to be very weak against its other counterparts and especially the dollar. Reasons for this is more disappointing economic data out of the UK and also the fact that traders are now pricing in at least two more rate cuts next year, after the BOE dovish minutes who saw 9 out of 9 to deciding on a cut. The market was expecting 2 out of 9 to vote for a cut in the last meeting, however the result really took everyone by surprise and therefore the sterling fell further.

GDP out of US was as expected, therefore didn’t really sparked any reactions form traders, who kept selling the euro. EUR/USD printed another new low a few pips away from 1.43, however the euro bulls protected 1.43 and the pair retraced since then.

Today the economic calendar is almost empty, with US personal income and expenses and PCE the only news.

Traders are in a full mode for more dollar gains and that is clear as EUR/USD sells aggressively on every attempt to take out 1.4410. This might continue today, as liquidity is really low as most traders are getting ready for the Christmas celebrations!

EUR/USD is trading within tight ranges at the moment and only a clear break of either 1.43 or 1.44 can give the pair some life for more movements. Good shorting levels now are 1.4425 ahead of 1.4450 and buy positions are only to be taken at low levels with a stop under 1.43.

GBP/USD is correcting today after the big fall, although the pair looks weak with a scope of 1.96 in the coming trading days. A retracement back towards 2 cannot be ruled out of course, however use any good levels to short, with stops above 2.

Let’s see how things will progress from here and how the dollar will end this year.
The fact that almost every January dollar seems to be strong all across the board, might be the catalyst for EUR/USD to reach its short term 1.41 target before another wave up maybe towards recent highs!

Merry Christmas to everyone, enjoy these special days and remember that the market will always be there for gain opportunities, to make the start of the year even more successful…

Published on  Fri, Dec 21 2007, 13:58 GMT

Is GBP/USD Ready to Trade Under 2?

Wed, Dec 19 2007, 14:48 GMT
by Lena Manousarides

FXGreece  |  View company's profile

As we are moving towards the end of the week, there is a lot going on to keep us busy ahead of the Christmas holidays!

Yesterday, currencies were moving within tight ranges, with EUR/USD still being trapped in 1.3965-1.4435 levels. A clear break out of these levels might give us short term the next move towards 1.43 or 1.45. Economic data out of the US were mixed yesterday, with Housing Stars although printed a better number than expected still it was quite bad. However, although dollar got sold after the news, the move wasn’t able to take out 1.4425 levels and euro gave back all its gains. We do notice that although pair’s movements are mute, dollar seems to enjoy its gains and euro bulls are defeated for the time being.

The economic calendar is almost empty today, with German IFO printing a lower number which makes the usual market jitters about dampening of European economy coming back into focus. Today we also had Trichet’s testimony regarding the problems that markets are facing when it comes to low liquidity. The fact that all central banks are coming together to help out with the recent liquidity crisis, gives investors some kind of relief and therefore that could help the dollar in the forthcoming sessions.

The biggest mover of the day was once again GBP/USD, as the pair broke finally the very important 2.0100 psychological level and printed 2.0032 where it rebounded modestly. The reason for the sell off in the pair was BOE minutes which gave the impression that the bank is thinking of further cuts in the near future. The fact that 9 out of 9 decided for a cut rate, tells us how worried the bankers are what with recent Northern Rock crisis still fresh in everyone’s minds. House prices are still down and analysts predict that economic data out of England will continue to disappoint.

GBP/USD is poised to break 2.0025 and a possible break of that level will put further pressure in the pair with a possible break of 2.

GBP/JPY is moving downward too, and the earlier break of 226.40 is keeping the pair pressured for a try of 225.80. We keep a sell view in the pair, with a possible target of 225 which is a very good support level. However, beware of the BOJ interest rates tomorrow as a dovish statement from Fukui can put yen back on the defensive.

With Christmas around the corner and most market players getting ready to call it a day, there is a risk of choppy trading in all major pairs and thanks to thin liquidity we might even see extreme trading all across the board. So, stay tuned and remember a new year is approaching and whatever happens, new trading opportunities will arise.

Published on  Wed, Dec 19 2007, 14:49 GMT

EUR/USD Looks Ready To Try 1.41 in The Coming Weeks…

Mon, Dec 17 2007, 15:12 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Another week has started with dollar clearly strong ahead of the last full trading week of this year.

After a very busy Friday, with EUR/USD breaking all important support levels, first at 1.4550 and then 1.4450, the pair made a monthly low at 1.4410. However the opening of the markets on Sunday evening, found more sellers in the pair, which resulted to the break of important 1.44.

Today started again with dollar strength, as euro remained on the defensive, however euro bulls were ready to start bidding the European currency form 1.4435 all the way up to 1.44 where it is at the moment of writing.

Today’s data out of the US were mixed, with current account slightly better but empire manufacturing printing a very low number. When time for the TICS data came, the number for last month was very high, which made investors think that the foreign demand for dollars made a comeback, after two continuing months of negative numbers.

EUR/USD is still on a selling mode despite euro correcting some of its losses, but since the pair was trading out of bounds and it was heavily oversold, that move was only natural.

This week we have plenty of economic data to keep us going, with the housing data being very important indicators to watch and also GDP out of the US.

Also it will be interesting to watch how the economic data will come out of but Euro zone and England, since we have the German IFO later on this week and UK inflation numbers along with BOE minutes.

GBP/USD was under pressure for one more day, as the House prices data earlier printed once again a very negative number. This makes traders think twice about buying the pound and next level to watch will be 2.0080. Shorts can be tried in any pull backs on the pair with target the latter level. A clear break of 2.0080 opens the path to the first important psychological 2.0 level.

EUR/USD found good support at 1.4335 for now and we can still try shorts in the pair near 1.45 for continuance of the recent downward move.

Later on today we have NAHB housing index out of the US, and it will be interesting to watch the number as the last few months was very bad. The fact that some of the recent economic data were better than expected, gave speculators the notion that the American economy is moving away from recession and FED will be forced to leave rates unchanged and not move to further easing as initially was perceived. This is the reason as well for dollars recent rally; however beware because the fact that few indicators came unexpectedly good doesn’t mean that the economy is fully restored. The sub prime mortgage fears are still alive and the housing sector is still suffering. This week we shall see after the housing numbers how big is the damage.

The fact that we are moving closer and closer to Christmas holidays might give the excuse for big moves as traders are closing their yearly books and will want to close their positions. Also, closer to the 25th we might see choppy trading as the liquidity will be thin and only a few players will be active which it will make the market quite unpredictable.

So, our advice will be after this Friday to enjoy the turkey and all the festivities and remain out of the market unless there are clear signals…

Published on  Mon, Dec 17 2007, 15:13 GMT

Is Dollar Ready for The Long Awaited Reversal?

Fri, Dec 14 2007, 15:31 GMT
by Lena Manousarides

FXGreece  |  View company's profile

What an explosive day we had today so far, with EUR/USD trading heavy and breaking important support levels, firstly at 1.4520 which we said yesterday, and then 1.4485 to make a new monthly low at the time of writing at 1.4464.

As we said yesterday, dollar seems to be on a corrective mood and today that confirmed with the first break of 1.45. The pair is trading out of bounds and it’s heavily oversold however a clear break of 1.4450 puts 1.4425 as the next level to watch.

Today’s CPI data was higher like it was expected, with traders and analysts now predicting no more rate cuts from Bernanke and pals in the next few meetings.

The fact that we see such heavy flows today in the dollar has something to do with Friday being the last trading day for year end portfolios and traders buying back the dollar in order to close their books.

It will be interesting to watch where EUR/USD will close tonight and a close below 1.45 certainly makes things more difficult for euro bulls!

Who would predict that December would turn out to be a positive month for the greenback, as history shows that the last month of the year we have dollar selling all across the board!

USD/JPY also climbed up towards 113 and briefly broke the resistance level, marking 113.15 the highest level for many weeks!

With today’s move, the dollar has certainly puts wheels in motion for reversal of the recent trend. The question that arises now in everyone’s mind is will it gain further in order to complete the correction started from 1.40 to almost 1.50? Well, from now until the end of the month it will be crucial to watch economic data out of the US and with better numbers printing we might start to think that the US economy is moving away from the big scary recession…

EUR/USD might reach new low levels today, as traders are still in a stop hunting mood, however we favour small buy positions in the approach to 1.4435 which is good support level and can give quick profits for the pair to correct back towards 1.45.

Let’s see what next week will bring us in this volatile and liquidative environment and if the greenback will keep its gains till the close of the year!

Published on  Fri, Dec 14 2007, 15:32 GMT

Dollar Continues Its Recent Rally! More To Come?

Thu, Dec 13 2007, 16:02 GMT
by Lena Manousarides

FXGreece  |  View company's profile

What a week this is turning out to be! Just when we started to think that the greenbacks strength had wasted away, we had resurgence these last few days, with EUR/USD trading with a heavy tone and generally finding difficulty to sustain gains over 1.47.

Dollar looks strong today, after economic data revealed high PPI prices and a very good number in retail sales.

EUR/USD is still confined in the 1.4650-1.4750 range at the time of writing, however a clear break of 1.4650 might take the pair down to test important support at 1.4625, which if breaks next level to watch is 1.4590. Dollar bulls are clearly having good time these days, as euro is struggling to maintain gains above 1.47. It would be certainly very interesting to watch tomorrow’s CPI data out of the US, and if we see another load of high inflation numbers, dollar might continue the recent rally.

The move yesterday by ECB and FED, to inject money in the markets, certainly took traders by surprise and as a result carry traders resurfaced and send all yen related pairs up, by more than 500 points! Initially that was bad news for EUR/USD where the pair climbed back up towards 1,4750, but reasons for that had more to do with EUR/JPY rally rather than anything else, so the pair retraced quickly below 1.47.

The question for us now is will the dollar strength continue until the end of the year and will we see the long-awaited correction for the recent weakness? Will we see 1.45 again soon? To allow an educated guess on what the answer to all these questions will be, we need first to see what the economic releases bring us. If we see better news coming from the US then chances are we will see increased dollar biding and maybe even a change in the already negative sentiment. Remember that with most traders’ greatest fear of recession still alive, better economic data might help ease those worries.

Our sentiment is that yes, we could see more dollar strength, especially as euro was getting overbought by the day and negative data out of Europe might further dampen the European currency, and yes, the dollar bulls might try to steal the spotlight once again. However beware of more euro buying towards the dips as there is extreme positioning for those Euro bulls, who might try to have another charge towards 1.48.

Also watch all yen related pairs, as USD/JPY is trying hard to break 112.50 resistances for another go towards 113.25. Also GBP/JPY is trading heavy these days, where in 2 days we have seen the pair gaining 500 points and then loosing it all the next day. Next level to watch is 230.30 which could be tried for quick shorts; however a clear break of that level puts the pair back towards 234.

Only time and data will tell, so keep your eyes and ears open during the coming week, as we might continue to see increased volatility and choppier trading ahead of the Christmas Holidays!

           

Published on  Thu, Dec 13 2007, 16:03 GMT

How Will Dollar Perform After FOMC Rate Cut?

Wed, Dec 12 2007, 12:44 GMT
by Lena Manousarides

FXGreece  |  View company's profile

         FOMC meeting came and gone, with dollar being the clear winner out of that event! The reasons though are not because all of a sudden investors became positive for the US economic outlook, but quite the opposite. Bernake delivered the news of 25 pbs cuts for both fund rate and discount rate, with a dovish statement that pointed out potential slowing in the economic growth and markets were clearly disappointed by that outcome. Under normal market conditions, news of a rate cut would make dollar dive instantly, however the fact that markets had priced in this scenario and clearly wanted a 50 pbs cut, made DOW JONES taka a dive and a sparked a wider liquidation in all carry trades.

         The fact that Bernakne and pals didn’t do what markets expected, gave the impression that FED is not reliable and not able therefore to start the process of restoring the already negative economic outlook!

         EUR/USD was steady ahead of the news, however when the decision hit the wires, traders decided to buy the dollar due mostly to risk aversion and therefore take the pair back down to 1.4635 where it bounced later on. The pair is clearly trading in a range of 1.4630-1.4750 these last few days and it might continue until we see a clear breakout of these levels. As long as the pair trades below 1.48, there are many possibilities for the break to happen on the downside for a quick retracement down to 1.4520, double bottom from last weeks low.

         It will be interesting to watch the economic data from now until next meeting in order to see the amount of damage that has been done in other sectors of the economy. Let’s not forget that these are the numbers that our friends in the FED are watching too in order to decide their next move.

         Today, after the European opening, carry traders got back in the markets and therefore took all yen pairs back up to test previous support levels. GBP/JPY has lost 500 points yesterday and today the pair retraced some of its losses. However, given the fact that the pound still remains weak and risk aversion is always round the corner, good shorting levels would be 227.50 first and then 228.25.A clear break of 229 however, might jeopardize the downward move and give the pair another go at 230 levels.

         The only news worth watching today is the trade balance from the US. Although the number is forecasted to be wider than the previous, we might have a surprise for the dollar as due to the dollar weakness and high oil prices the deficit might narrow. It will be important to watch this number as one of the main reasons why America wanted a weaker currency these months was because that would eventually help narrowing the ever increasing trade deficit.

         With CPI, PPI and retail sales out of the US tomorrow and Friday, dollar is not in the clear yet and more negative data might put the greenback back in the spotlight. 

         Let’s see if this week’s data will be good enough for the dollar to continue its correction, which started last week and still is trying so hard to complete. EUR/USD still looks good under 1.48 and if it continues like that throughout the week we might see 1.4530 again. The later level is very important support and it will be difficult to be taken out, however if that happens then it opens a clear way for 1.44 and maybe under...

Published on  Wed, Dec 12 2007, 12:46 GMT

Will FOMC Outcome Be Dollar Positive?

Tue, Dec 11 2007, 12:50 GMT
by Lena Manousarides

FXGreece  |  View company's profile

            The most important day of the month is here, with FOMC meeting just a few hours away. Yesterday we had a relatively quiet day with pound the only currency with the most volatility as it kept rising all across the board due mostly to GBP/JPY, as carry traders are back!.

            Today there is a lot of activity in the pairs as traders position themselves for the great event. Early in the European morning, we had ZEW economic sentiment out of Eurozone, which printed quite a bad number and caused EUR/USD to fall below important 1.47.The pair did rise just after the London market opening and hit 1.4750 where it found willing sellers that took the pair right down. It will be certainly interesting to watch more European data, as the risk of further deterioration in the Europe area is big and therefore that could put pressure in ECB old time hawk Mr Trichet. If the news continues to disappoint, analysts will predict that the bank will have to start thinking twice about its “lets fight inflation” recent stance! The question, is will ECB be pressured to start easing rates as well? Well the data will show how the economy is performing so until then everything is possible.

            However, let’s not forget that the market’ s attention is only in one thing today and that is later tonight in what will happen with the FED. The main question, is will the FED give in to the markets expectations for a cut? All data and situations lately show that they will have to cut at least by 50 points until the middle of next year. However, the fact that Bernanke was so adamant in the past when it came to easing, leads many to believe that they might cut once by only 25 points and then stop. All scenarios are on the table with the more extreme ones to even suggest that he might not cut today but instead be dovish for further hikes in the future.

            Whatever the outcome, watch closely the market reaction, which will be choppy and volatile and after a few minutes we might actually see how everyone is interpreting all this. We believe that before the meeting we won’t see big moves in the currencies as traders are wary of the risks and they might range trade instead, looking for more clues as to what will the day bring.

            However, if we see any surprises during the day from any unscheduled events, then we might see some moves in the EUR/USD especially.

            So, there will be interesting opportunities today what with everything that is going on, so stay focused on the economic releases and watch out EUR/USD and GBP/USD as both pairs are getting ready for big moves in the aftermath of the announcement.

            We still favour sales when it comes to the pound, long term, as it is one of the most overvalued currencies in the last few moths and the financial problems that the country is facing or is starting to face, together with lower inflation numbers, makes it the best candidate for a drop back to its old levels below 2 in the coming months.

             Also, let’s not forget our favourite carry traders which we see back for more “blood”, as they moved all yen pairs much higher, with USD/JPY threatening to take out 112, ahead of 112.50. The same thing is happening with GBP/JPY after the pair broke important level 229.30 and moved up towards 230. Have in mind that 230.30-50 would be good levels to short the pair for a quick profit; however a clear break of that level favours a deeper correction upwards towards 234. As the end of the year comes through, and more financial problems arising every day, carry traders might pair back their positions as risk aversion might hit the markets once again…

Published on  Tue, Dec 11 2007, 13:01 GMT

1.44 Or 1.48 The Next Target for EUR/USD?

Mon, Dec 10 2007, 11:32 GMT
by Lena Manousarides

FXGreece  |  View company's profile

                Let’s get ready for a busy week as not only do we have many economic releases out of the US but we also have the FOMC meeting tomorrow with the Feds decision the most awaited event of the month. Many speculators have already started to price in a 25 points cut, but the general feeling is that Bernanke and pals wont give in to the market’s pressure for further easing of the interest rates.

                Let’s see briefly what happened last week, with a not so busy economic calendar. The main event of the week was the non farm payrolls release, which was close to markets forecasts and therefore it was not enough to spark a new wave of dollar sales.

                EUR/USD printed a new monthly low at 1.4520 but the move didn’t find any more interest and soon it retraced back above 1.46 where it closed Friday evening.

                The other important events of the week were the BOE and ECB rate decisions. Although initially the forecasts wanted BOE to leave rates unchanged, the very fact that Halifax House prices printed a very low number, combined with further negative data from the UK economy, made the bank rethink their policy and therefore having to cut rates instead. The immediate reaction by the markets was panic followed by a complete pound sell off all across the board with GBP/USD falling near the 2.0100 level.

                However, as all investors priced in a potential rate cut, when the news hit the wires, pound made a comeback and was moving up towards 2.0300 where it closed Friday night.

                Although Trichet left rates unchanged, markets were a bit surprised by his hawkish tone, as he basically said that the bank will continue monitoring the inflation which they fear is getting higher and higher!

                This week we have a very busy economic calendar out of the US and Europe. It will be very interesting to see how the market will react tomorrow after the Fed decision, after all the hype that’s been built over the last few weeks. Many analysts believe that Fed will cut tomorrow by 25 points but will keep its hawkish tone regarding inflationary risks, due to the fact that dollar is already suffering and oil is near record levels once again. Whatever the outcome, we are likely to see a lot of volatility before and after the announcement with traders trying to position themselves.

                Other news this week is: CPI and PPI out of the US, which will be monitored closely by the markets for future decisions on rates by the FED. Also we have Housing data today, with pending home sales, for more insight as to what is happening in the already suffering housing sector. Let’s not forget retails sales and trade balance later on in the week.

                In addition we have CPI and PPI out of the UK which will be watched closely by the market as everyone starts to believe that further cuts are due next year.

                EUR/USD is at very important levels at the moment as it is very close to either 1.48 or to a deeper correction back to 1.44. In the last two weeks all we have seen was dollar trying hard to correct its recent losses, with the pair breaking important support levels but retracing at a quicker pace.

                 This is not likely to continue this week, as the risk of tomorrow’s announcement coupled with the release of further negative economic data might drive EUR/USD higher. However, as long as the pair trading below 1.48 there are still hopes for a deeper correction, depending on this weeks economic releases. Lets face it, markets have already priced in a cut of 25pbs by the FED, therefore as long as Bernnake doesn’t surprise us i.e. 50 pbs cut or no cut, dollar will be more likely to consolidate further. Although a cut is always conceived negative for the greenback, this time we might see strength instead as traders might think that FED is taking steps against recession. Therefore, providing that other economic data help, EUR/USD might drop further towards 1.45. Don’t forget that already banks and investment houses are advising their clients to start buying the greenback for a possible reversal.
                               
                For sure it will be a very active week, watch out for any breakouts and new highs in the currencies and be aware of more financial crisis arising out of both US and Europe…

Published on  Mon, Dec 10 2007, 11:33 GMT

Next Week Will Show If Dollar Is Up For a Comeback!

Fri, Dec 7 2007, 16:19 GMT
by Lena Manousarides

FXGreece  |  View company's profile

               This week is coming to an end, with EUR/USD trapped in a tight range of 1.4550-1.47. After a relatively busy trading week, with dollar gaining all across the board, traders were waiting today’s payroll data for more insight as to what the FED will do next week.

                Most analysts believe that FED will cut the rates by 25 pbs, due to comments by Bernanke and pals that the bank is ready to act to defuse the recent credit crisis. Non farm payrolls didn’t really give that much information, as the number was close to forecasts at +94000 new jobs instead of 80000 which was forecasted. EUR/USD although dropped in the first few minutes, managed to reverse the move and made another go to the upside to try and meet 1.47, however the move was capped quickly as willing sellers came to dollars rescue!

                The question is what will Bernanke and pals do at the policy meeting next week? Will they take the “safe” approach and cut rates once again in order to stabilize the housing problems? Or will they leave rates unchanged due to the very low dollar levels and fear of further deterioration in the markets?

                With many analysts predicting a rate cut of 25 points, and markets already pricing in this outcome, the only other way that we will see a big move in all dollar related pairs, will be a surprise move by Bernanke and friends. The two other scenarios would be either to leave rates unchanged and therefore give dollar a temporary boost, or cut as much as 50 points like the last time, and so dollar will continue its recent slide.

                Although this week we saw some strength in the greenback, the fact that euro bulls are always ready to buy in dips, puts further pressure in the American currency and thus makes it difficult for dollar to sustain its gains. The good example was yesterday, just before Trichet press conference, EUR/USD made new lows at 1.4520 but it was met with euro bids and the fact that Trichet was slightly hawkish gave the green light for euro to climb back up.

                The question at the moment in everyone’s mind is what happens now for the greenback? With the year coming to an end and 1.50 looking more distant by the day, the next important event will be FOMC meeting which will hopefully provide volatility and break the pair from the recent range. Historically, the pair is appreciating towards the end of the year and then falls from New Year onwards. So, we wouldn’t be surprised to see further EUR/USD gains towards the recent highs, before the good dollar correction finally starts to materialize.

                So, let’s wait and see what next week will bring us and how markets will react to FOMC outcome and also CPI and PPI data, which will be monitored closely by everyone…

Published on  Fri, Dec 7 2007, 16:20 GMT

Dollar Strength: Short Term Correction or Something Deeper?

Mon, Dec 3 2007, 14:42 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Last week saw the dollar strengthening against all the currencies and especially the euro, with EUR/USD breaking important support levels firstly at 1.4725 and then 1.4685, to close the week at 1.4625. The dollar was the winner and although the economic data was disappointing once again, still dollar managed to gain all across the board.

                The main reasons for dollar strength were firstly the fact that last week was the end of the month and many traders were closing their long euro positions in order to take the monthly profits. Also, the fact that FED officials signaled a further cut in December, seemed to work in dollars favor this time, as market believed that the FED is taking some action against recession.

                Whatever the reasons, the euro remained weak and still today Monday, EUR/USD, although retraced briefly to 1.47, found sellers once again taking the pair to important support at 1.4625. Only a clear break of this level will jeopardize euros strength, as next target will be 1.45. So far, it seems that 1.45 will come sooner than 1.50 but lets wait until this weeks data come, as we have non farm payrolls and ECB rate decision.

                Today, EUR/USD is trading within 1.4625-1.47 range and only a clear break of these levels might give us further signal as to what the pair’s next move will be. The only economic news from the US today is ISM Manufacturing which is expected to be stronger than previous month.

                This week is very important for dollars fate, as not only we have Trichet speaking in a press conference regarding rates, but we also have the very important payroll data which will help markets assess how bad things are in the American economy. Most analysts expect ECB to leave rates unchanged; however it will be very interesting to hear what the bank will do regarding rates in the next year.

                 With euro at such high levels and the risks of economic growth slowing, we might hear Trichet downplaying further rate hikes for at least a few months. Some analysts predict that the bank will have to start easing rates next year, if the economic data from Europe continue to disappoint. Therefore, with these events all unfolding, we might eventually see euro crushing from the high levels and return to 1.40 in the coming months.

                Let’s not forget though that historically the month of December is usually negative for the dollar as it’s the end of the year and traders tend to sell the American currency. This time things might be even worse as the economic outlook seems negative and there are more reasons for dollar bears to keep on selling the greenback. However, usually New Year tends to start with dollar strength and if EUR/USD makes another quick go at 1.50, the move might be reversed with the start of the New Year!

                Let’s wait and see what this week brings us and if the greenback manages to sustain the recent gains against the euro and if we manage see 1.45…

Published on  Mon, Dec 3 2007, 14:43 GMT

EUR/USD: 1.45 OR 1.50 The Next Target?

Fri, Nov 30 2007, 15:17 GMT
by Lena Manousarides

FXGreece  |  View company's profile

                Another week is coming to an end, with dollar having an interesting week, as the currency gained against the euro for most of it. The economic data still are coming out on the negative side for the greenback, however until the payroll data next week; we won’t have a big reaction from the markets, as there is already negative sentiment.

                Yesterday we saw dollar gaining for most of the day, with euro bulls trying hard to sustain move up to 1.4785 and as a result the move faded with renewed dollar strength. The markets are in a wait and see mode these days, and the fact that today is the end of the week as well as month, is making trading a little choppy as market players closing their profits.

                Today we have a few economic releases out of the US, with consumer spending being the most important, along with Chicago PMI.

                As we have noticed in the past few sessions, traders are completely ignoring the news and the only announcements that really move the markets are any that have to do with the rate outlook.

                Comments by both vice president Kohn and Bernanke recently gave traders the impression that the bank will move to further rate cuts by even a 50 pbs. That gave EUR/USD a temporary lift, but the pair found resistance again at 1, 4785, where it retraced quickly.

                All eyes will be on next weeks ECB monetary policy meeting, as Trichet will comment on current rate outlook and hopefully he will give us more clues as to what the next move by the bank will be. Most analysts believe that ECB will put rates on hold for the coming months and even be pressured to cut, if European growth starts to deteriorate. The other next big thing for traders will be next week’s payroll data which will be very crucial for greenbacks short term future. FED said that one of the main focuses on their decision will be this number as the employment numbers are always important for economic growth. Most analysts forecast a lower number after last months 166K took markets by surprise.

                However, the main question at this point is what happens with EUR/USD? Will it continue the recent consolidation, before resuming the move towards 1.50? Or will we see the euro bulls back on track ready for more “dollar blood”? There are many who think that dollar found bottom at 1.4967 and the recent strength in the American currency is the beginning of the end for dollar suffering. However, with more potential negative data and further cuts by the FED, dollar bulls have a difficult task to get bank in the game!

                EUR/USD levels to watch will be: 1.4785 as at the time of writing it has formed a triple top. If that level gives way, then next resistance will be found at 1.4825-50 and the pair will be looking to continue the marathon up to 1.50. On the downside, we still have 1.47 holding steady as a potential break will put pressure for further dollar gains and the long awaited 1.4620. Basically whatever comes first it will give a good trading opportunity for continuation of the move at least for 50-60 pips…

Published on  Fri, Nov 30 2007, 15:21 GMT

Further Dollar Strength Ahead?

Thu, Nov 29 2007, 13:27 GMT
by Lena Manousarides

FXGreece  |  View company's profile

What a week this is turning out to be! Just when we started to think that the greenbacks strength had wasted away, we had resurgence these last few days, with EUR/USD trading with a heavy tone and generally finding difficulty to sustain gains over 1.48. Yesterday, we saw euro weakening during the day, when traders were pairing back their long positions and therefore send the pair below 1.4750. However the move reversed later on, when a flurry of purchasing activity sent the pair towards recent highs at 1.4860...

As data was mixed, what prompted the big move up in the pair were comments by Fed vice president Kohn that further cuts maybe needed in the next meeting. These comments together with Fed Beige book which showed economy slowing , sparked dollar selling  interest from big names (the rumour was that certain central banks were the chief suspects behind that move) and the EUR/USD pair moved up within minutes to retest the 1.4870 level, but faded quickly as the pair headed back to 1.48.

Just when we thought it was safe to think that 1.50 was closer than ever, we saw a huge U-turn all across the board with the greenback getting stronger and stronger by the second, eventually completing a 265-point move down, breaking resistances at 1.48 and hitting a new low for the week of 1.4700.

Today we have GDP and New Home Sales out of the US, which will be crucial for more evidence of economic woes in the American economy. The recent data, suggest that we might see a small progress in the GDP number, however with the housing data being the other news of the day and the already negative sentiment regarding the housing sector, it will be interesting to see traders reaction.

The question for us now is will the dollar strength continue next week and will we see the long-awaited correction for the recent weakness? Will we see 1.45 again soon? To allow an educated guess on what the answer to all these questions will be, we need first to see what the economic releases bring us. If we see better news coming from the US then chances are we will see increased dollar biding and maybe even a change in the already negative sentiment. However the market will need to see very good numbers from next weeks non farm payrolls, before making final decisions. Let’s not forget that Fed officials themselves hinted that next payroll data will determine the rate outlook and if negative, easing the rates will be inevitable.

Our sentiment is that yes, we could see more dollar strength, especially as euro is getting overbought by the day and negative comments of European officials  might further dampen the European currency, and yes, the dollar bulls might try to steal the spotlight once again. However beware of more euro buying towards the dips as there is extreme positioning for those Euro bulls, who might try to have another charge towards 1.50.

Only time and data will tell, so keep your eyes and ears open during the coming week, as we might continue to see increased volatility and choppier trading ahead of the Christmas Holidays!

Published on  Thu, Nov 29 2007, 13:30 GMT

The Dollar Starts To Gain! Is There More To Come?

Wed, Nov 28 2007, 12:41 GMT
by Lena Manousarides

FXGreece  |  View company's profile

                 Is it time for dollar to start gaining against the euro? Well if you take a look at the prices this morning you might say that there is a big possibility for more dollar gains.

                Yesterday the dollar got sold off during the New York session and EUR/USD reached 1.49 in a move that retraced heavily in the next few hours.

                EUR/USD was unable to sustain gains yesterday and early this morning at the Asian session. So, when Europe entered the markets this morning, the unavoidable happened! The pair dropped 100 points breaking all important support levels, firstly at 1.4780 and then 1.4750. The pair found temporary support at 1.4725 at the time of writing, but a closer look at the charts shows that there is room for more gains in the greenback, providing that New York market will have the same approach.

                Yesterdays data from the US showed a worse than expected consumer confidence number, however with traders already pricing in the worse, it wasn’t enough to put more pressure in the dollar.

                Today, traders are anticipating the Durable Orders from the US and also the existing home sales. The forecasts show some slowing in the Housing numbers but a pick up in the order numbers. If the data however surprise to the upside, we might see further gains in the dollar and a possible break of 1.47, with next target 1.4625.

                It important for the euro bulls to keep the 1.46 level, because a potential break might jeopardize the uptrend and put a temporary stop in the “euro buy madness” that’s been going on since the summer.

                However, before you start buying the dollar, keep one thing in mind: 1.50 can still be targeted in the next coming weeks, as the big players might seize the opportunity and buy on dips for another try at the almighty 1.50.

                So far, carry traders are back and it seems that USD/JPY has broken important resistance levels at 108.85 and then 109.25 and there is scope for important 110.60 maybe in the coming weeks.

                Recently, FED members hinted that the bank won’t cut further in December and that together with obvious profit taking, keeps the dollar bid for the time being. The reasons and explanations for the dollar strength might be many and varied, but one thing is for sure: Dollar needs 1.46 taken out, in order to signal a proper reversal in the pair!

                Let’s see what the data will show for the American economy and how the traders will react! It is interesting to note that in recent sessions, what Europe sells, New York comes in and buy back! So, don’t be surprised if euro gains from here and correct the losses until further retracement gets underway…

Published on  Wed, Nov 28 2007, 12:43 GMT

Will This Week Give EUR/USD the Final Push To 1.50?

Tue, Nov 27 2007, 12:27 GMT
by Lena Manousarides

FXGreece  |  View company's profile

This week started with dollar getting some boost against the euro, after Monday proved to be yet another positive day for the greenback for most of the European session. However, when the Americans entered the market this picture changed and we saw a massive sell off in all carry trades as risk aversion hit the markets once again.

            All yen related pairs took a dive, with USD/JPY printing a 2 year low at 107.20. The renewed fears of further slowing caused by the sub prime crisis, gave reasons to the investors to further sell the American currency and reverse the dollar gains.

            However, the rally in EUR/USD wasn’t enough to take 1.4885 as the pair found a double top and retraced during the Asian session. The same thing happened to all carry trades and we saw USD/JPY back up at 108.50.

            The economic calendar was empty yesterday and traders were wary of any new positions ahead of important economic releases later on in the week. Let’s not forget that from now on until the next FOMC meeting, market players will monitor all data closely in order to make up their minds as to what the next move by the FED will be.

            It is clear that the fear and uncertainty is still alive in the markets and traders think twice before they take a long term position. The sentiment is still dollar negative, however we saw that euro bulls are in a wait and see mode before they decide to bid the currency into new record highs. European officials yesterday, made some comments about the recent strength of the euro and how it is not helping the economic growth, but unless there is a clear and joint voice from everyone that the euro should stop appreciating, traders will not be stopped until their main target: 1.50.

            Today, we had the German IFO data, which was surprisingly better than expected and that gave a slight boost in the EUR/USD pair from 1.4815 to 1.4850. However, the move was short lived and traders are waiting for more reasons to buy the European currency at those levels.

 
            1.50 is so close for the pair and with most analysts and banks suggesting that we will see that in the course of the next few days, it makes us wonder how higher the euro can go after that? Let’s remember what we re saying when the pair was at the 1.25 levels. Back then 1.35 to 1.40 was like a forbidden level! Most analysts believed that European officials won’t let the pair see those levels and they would intervene. However, euro did see those levels and now is threatening to climb even higher and there is still not a pip from the so called “worried” European officials… What is going on? Can European businesses cope with such a high euro? Well, apparently they can. All you have to do is look at the latest economic exports numbers and you will see that not only they didn’t dampen, but printed a steady and slightly higher number!

            It will be interesting to see what the rest of the week will bring us, what with Durable orders from the US taking the stage tomorrow and also the Housing Data. Markets are so used to negative US numbers and therefore their reaction is mute after yet another bad performance form the American economy. The main thing is that dollar although weak and in bad shape, will get the chance to shine, if not next month then for sure in January as history shows that the beginning of the year starts with dollar strength!

            EUR/USD hovers at 1.4825-1.4885 and only a clear break of 1.4885 will put pressure on the dollar bulls for another try of 1.4965. The good support levels for the greenback are 1.4775 as there are always willing buyers at those levels. Only a break will put 1.47 back in view but for now we anticipate 1.48-1.49 until the next important data comes along…

 

Published on  Tue, Nov 27 2007, 12:31 GMT

Will This Week Give EUR/USD the Final Push To 1.50?

Tue, Nov 27 2007, 12:04 GMT
by Lena Manousarides

FXGreece  |  View company's profile

This week started with dollar getting some boost against the euro, after Monday proved to be yet another positive day for the greenback for most of the European session. However, when the Americans entered the market this picture changed and we saw a massive sell off in all carry trades as risk aversion hit the markets once again.

All yen related pairs took a dive, with USD/JPY printing a 2 year low at 107.20. The renewed fears of further slowing caused by the sub prime crisis, gave reasons to the investors to further sell the American currency and reverse the dollar gains.

However, the rally in EUR/USD wasn’t enough to take 1.4885 as the pair found a double top and retraced during the Asian session. The same thing happened to all carry trades and we saw USD/JPY back up at 108.50.

The economic calendar was empty yesterday and traders were wary of any new positions ahead of important economic releases later on in the week. Let’s not forget that from now on until the next FOMC meeting, market players will monitor all data closely in order to make up their minds as to what the next move by the FED will be.

It is clear that the fear and uncertainty is still alive in the markets and traders think twice before they take a long term position. The sentiment is still dollar negative, however we saw that euro bulls are in a wait and see mode before they decide to bid the currency into new record highs. European officials yesterday, made some comments about the recent strength of the euro and how it is not helping the economic growth, but unless there is a clear and joint voice from everyone that the euro should stop appreciating, traders will not be stopped until their main target: 1.50.

Today, we had the German IFO data, which was surprisingly better than expected and that gave a slight boost in the EUR/USD pair from 1.4815 to 1.4850. However, the move was short lived and traders are waiting for more reasons to buy the European currency at those levels.

1.50 is so close for the pair and with most analysts and banks suggesting that we will see that in the course of the next few days, it makes us wonder how higher the euro can go after that? Let’s remember what we re saying when the pair was at the 1.25 levels. Back then 1.35 to 1.40 was like a forbidden level! Most analysts believed that European officials won’t let the pair see those levels and they would intervene. However, euro did see those levels and now is threatening to climb even higher and there is still not a pip from the so called “worried” European officials… What is going on? Can European businesses cope with such a high euro? Well, apparently they can. All you have to do is look at the latest economic exports numbers and you will see that not only they didn’t dampen, but printed a steady and slightly higher number!

It will be interesting to see what the rest of the week will bring us, what with Durable orders from the US taking the stage tomorrow and also the Housing Data. Markets are so used to negative US numbers and therefore their reaction is mute after yet another bad performance form the American economy. The main thing is that dollar although weak and in bad shape, will get the chance to shine, if not next month then for sure in January as history shows that the beginning of the year starts with dollar strength!

EUR/USD hovers at 1.4825-1.4885 and only a clear break of 1.4885 will put pressure on the dollar bulls for another try of 1.4965. The good support levels for the greenback are 1.4775 as there are always willing buyers at those levels. Only a break will put 1.47 back in view but for now we anticipate 1.48-1.49 until the next important data comes along…

Published on  Tue, Nov 27 2007, 12:15 GMT

Will Thanksgiving Day Give Dollar Reasons To Be Thankful?

Mon, Nov 19 2007, 16:51 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Another week is just starting and the currencies are trading within tight ranges, ahead of tomorrows FOMC meeting.

            Last week EUR/USD kept the 1.4580-1.47 range and only on Friday we saw some action, after rumors of potential reserve diversification by the Middle East countries hit the wires. The economic data was mixed for the dollar with CPI coming slightly higher but retail sales worse than expected.

            Last weekend we had the OPEC meeting and there was a lot of noise amongst the traders who were saying that due to the weak dollar in recent months, UAE would decide to change their dollars into other currencies and possibly in to euros. However due to the current dollar weakness, the OPEC officials avoided making any comments because that could as they said create more reasons in the markets to sell the dollar further.

            This week we have the FOMC meeting and we shall see how the market react to that, after the latest cut by the the FED. Many analysts believe that Bernanke will leave rates unchanged for now, as inflationary pressures will hit the American economy in the short term. It is clear though that the fear and uncertainty is alive in the markets and every time there is some kind of rumor about another Bank having liquidation problems, all carry trades continue to slide and traders get out of risky positions.

            This week we also have Housing data, with Housing starts and building permits being the most important ones. Most analysts believe that the numbers will come lower and therefore that might dampen the dollar further.

            It is important to take into account that this Thursday is Thanksgiving Day and the US markets will be closed, therefore some traders might use this excuse for a long weekend starting from Wednesday. Be aware of that day though, cause if we look back at what happened last year, we shall see that EUR/USD was trading heavily and out of bounds as some big players took advantage of the thin liquidity and moved the pair 300 points in a what seemed to be a stop hunting session.

             There is that risk this year as well, however depending on where EUR/USD will be on that day the move might be even more extreme as 1.50 is the favored target for the time being. If for example the pair is at 1.47, thin liquidity might create aggressive bids and take the pair to extreme overbought levels. It is clear that the trend is still up and at every opportunity, traders sell the greenback.

            EUR/USD is trading within 1.46-1.47 range this morning and it might continue this for the rest of the day, as volatility is low and the day is relatively quiet regarding economic data. The only news from the US that is worth seeing is NAHB index which gives us an idea of how the housing sector performed in the last month and its forecasted to be lower again as it was for the last 3 months.

            Markets are looking for direction at the moment and dollar is in a wait and see mode. We believe that this week might give us a lot of trading action and with Thursday US Holiday just a few days away dollar might be in for another selling trip…

 

Published on  Mon, Nov 19 2007, 16:53 GMT

Will Thanksgiving Day Give Dollar Reasons To Be Thankful?

Mon, Nov 19 2007, 12:44 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Another week is just starting and the currencies are trading within tight ranges, ahead of tomorrows FOMC meeting.

                Last week EUR/USD kept the 1.4580-1.47 range and only on Friday we saw some action, after rumors of potential reserve diversification by the Middle East countries hit the wires. The economic data was mixed for the dollar with CPI coming slightly higher but retail sales worse than expected.

                Last weekend we had the OPEC meeting and there was a lot of noise amongst the traders who were saying that due to the weak dollar in recent months, UAE would decide to change their dollars into other currencies and possibly in to euros. However due to the current dollar weakness, the OPEC officials avoided making any comments because that could as they said create more reasons in the markets to sell the dollar further.

                This week we have the FOMC meeting and we shall see how the market react to that, after the latest cut by the the FED. Many analysts believe that Bernanke will leave rates unchanged for now, as inflationary pressures will hit the American economy in the short term. It is clear though that the fear and uncertainty is alive in the markets and every time there is some kind of rumor about another Bank having liquidation problems, all carry trades continue to slide and traders get out of risky positions.

                This week we also have Housing data, with Housing starts and building permits being the most important ones. Most analysts believe that the numbers will come lower and therefore that might dampen the dollar further.

                It is important to take into account that this Thursday is Thanksgiving Day and the US markets will be closed, therefore some traders might use this excuse for a long weekend starting from Wednesday. Be aware of that day though, cause if we look back at what happened last year, we shall see that EUR/USD was trading heavily and out of bounds as some big players took advantage of the thin liquidity and moved the pair 300 points in a what seemed to be a stop hunting session.

                There is that risk this year as well, however depending on where EUR/USD will be on that day the move might be even more extreme as 1.50 is the favored target for the time being. If for example the pair is at 1.47, thin liquidity might create aggressive bids and take the pair to extreme overbought levels. It is clear that the trend is still up and at every opportunity, traders sell the greenback.

                EUR/USD is trading within 1.46-1.47 range this morning and it might continue this for the rest of the day, as volatility is low and the day is relatively quiet regarding economic data. The only news from the US that is worth seeing is NAHB index which gives us an idea of how the housing sector performed in the last month and its forecasted to be lower again as it was for the last 3 months.

                Markets are looking for direction at the moment and dollar is in a wait and see mode. We believe that this week might give us a lot of trading action and with Thursday US Holiday just a few days away dollar might be in for another selling trip…

Published on  Mon, Nov 19 2007, 13:02 GMT

Further Dollar Strength Ahead?

Tue, Nov 13 2007, 11:06 GMT
by Lena Manousarides

FXGreece  |  View company's profile

What a day proved to be Monday, what with all yen pairs dropping aggressively as carry trades were liquidating all day long. The reason why we saw dollar gaining all across the board was not really because investors had a change of heart regarding the negative dollar sentiment, but due to risk aversion.

                EUR/USD was mainly down during the day yesterday; however Asian session saw the pair retracing the whole move from 1.4520 to 1.4630.

                Sterling was the big loser of the day, as GBP/USD had a drop of around 400 points! The pair was heavily sold during the day, as maybe a delayed reaction to negative data the previous days. However, even better PPI data didn’t seem to impress the traders. The fact the GBP/JPY dropped dramatically over the last few days, weighed on the pound and it only came up for air when GBP/JPY retraced some of its losses.

                Today, after we saw better than expected CPI data out from UK, the currencies are in a correcting mode after the liquidating Monday. EUR/USD is trading near 1.46 again and GBP/USD is approaching 2.0750.

                The main news later form US is pending home sales data. Market players will monitor closely this indicator as the recent remarks of Bernanke regarding problems in the housing sector, are still fresh in their minds. The forecasts are on the upside and if indeed the number is much better, dollar might get a boost, as housing numbers are becoming its sore point!

                The fact that EUR/USD always has willing buyers ready to take the pair back up makes us think that the uptrend is still alive and kicking and sooner rather than later we might see another visit to recent highs of 1.4750.

                Later on this week there is more important news to enquire our attention, what with retail sales being the main event. It will be important for the dollar bulls to see positive data from the US, after Fed cut the rates by 25 pbs and even is threatening to repeat this later on in the year. Bernanke did say that in the long term dollar should gain again, so one could think that the whole weakness of the dollar at the moment is serving a purpose and the main priority isn’t the currency but the slowing of the economy.

                Lets see what today brings and how the markets will react to any data later on. We see though that due to the recent risk aversion, market players have stopped reacting to any data and as a result we see choppy trading all across the board…

Published on  Tue, Nov 13 2007, 11:08 GMT

Is Dollar Ready For A Comeback?

Mon, Nov 12 2007, 12:38 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Another week has started, with EUR/USD off its best levels at 1.4750, a new record high which was printed on Friday.

                Friday was a day full of volume for all currencies, with yen carry trades liquidating for most of the day. Some rumors were circulating across the wires, that China would raise its interest rates in order to fight inflation, and that send yen in a buying trip with USD/JPY and GBP/JPY loosing more than 1000 points between them. The latest fears of another credit crisis led more carry traders to exit their risky positions and therefore we saw a day full of activity in all currency pairs.

                The only pair which was resisting the fall was EUR/USD, as for every new low the pair was making in the day, there were always willing buyers. After reaching 1.4750, the pair went into a serious heavy selling mode and lost most of its gains, printing daily low at 1.4630.

                After both ECB and BOE, left its rates unchanged, Trichet basically said that the bank doesn’t worry about the recent euro strength, but mostly about the inflationary pressures. In his statement afterwards, he didn’t really give us anything new about the monetary policy, but with his silence regarding the euro strength, he gave the “green light” to investors to further buy the European currency.

                Bernanke also was reluctant to mention the recent dollar weakness and all he said after he acknowledged the problems that his country is facing, was that the dollar should gain in the long term.

                This week, dollar started on a positive tone, thanks to carry trades liquidating all across the board. EUR/USD is struggling to maintain the highs, however always find buyers in the new dips.

                Today America is closed for Veterans Day and therefore we might see some action from big accounts, which wait for opportunities of thin liquidity in order to enter the market and create havoc.

                This week we have plenty of data to keep us occupied, with retail sales and CPI/PPI out of the US, taking the stage. Also we have a few economic data out of Europe, with ZEW the most important one for any indication of the business sentiment after the recent euro strength.

                Market clearly waits for another chance to take EUR/USD up to its favorite target, which seems to be 1.50. However, if oil doesn’t reach 100 dollars per barrel and instead it retraces back to 80, how will the dollar perform? In recent trading sessions, we saw that the correlation between oil and EUR/USD is very close and when the pair hits new highs, the oil is following.

                The trend in EUR/USD is still up and only a loss of 1.44 might jeopardize the whole uptrend. The dollar bears have to keep that level in order to support any further buying in the pair.

                Lets see how this week will progress and if this week will be the dollar’s golden opportunity for a comeback…

Published on  Mon, Nov 12 2007, 12:39 GMT

Will Bernanke Save The Dollar From Further Losses?

Wed, Oct 31 2007, 13:03 GMT
by Lena Manousarides

FXGreece  |  View company's profile

The big day is finally here, with dollar getting the worst of both Asian and European session, with EUR/USD closer to 1.45 than ever before! Yesterday, we had consumer confidence, which printed again low number and therefore sparked a new wave of dollar selling all across the board.

            With EUR/USD near 1.45 and GBP/USD above 2.0700 it will be interesting to see how the markets will react after the New York open, as we have a big bulk of economic data starting with the ADP report. This report will remind traders that whatever the outcome of today, there is still he risk of Non farm payrolls on Friday. After that, we have GDP out of the US, which again is forecasted bad and lastly Chicago PMI, the last news before tonight’s rate decision.

            As we have said before, there is a lot of speculation regarding the outcome of today’s decision by the FED, with a cut of 25bps being the most likely one. Market analysts over the last few weeks, go over the data again and again and have concluded that Bernanke and pals will have to end up cutting at least once again, in order to calm the markets after the big turmoil. However, due to a record low dollar and risk of further crushing in the equities, there is common belief amongst traders that the bank might indeed give a cut to the markets but the discount rate instead of the fund rate. All those scenarios and speculations will be answered tonight, with expected wild moves all across the board. The only version that will give dollar a temporary lift will be if FED leave rates unchanged. However, even if that happens, dollar bulls won’t have the chance to celebrate much, as markets will be disappointed if FED doesn’t do anything and therefore continue to sell the dollar after the initial reaction. The whole thing is a vicious circle as we see, as whatever Bernanke does, it will potentially have negative effect in the markets.

            The other big move today in currencies was in all yen related pairs, after Bank of Japan left the interest rates unchanged and President Fukui in his speech acknowledged the downside risks to the economy. These events lead to a massive sell off in the yen and we saw all carry trades being bid like there was no tomorrow.

            The risk of further carry unwinds is always there, as another crisis in American economy can spark liquidation in all yen related pairs.

            If all data point out to further worsening of the US economy, we might see further dollar weakness and therefore EUR/USD accelerating to new highs ahead of the decision.

            Nevertheless, we must be aware of the aggressive dollar sell off which is happening these days in the name of a possible Fed cut, because in the past when moves like that happened before the actual news, the reaction was the opposite after the news. So, there is a chance that the market will react in a “buy the rumor sell the fact” mode and the move up in both EUR/USD and GBP/USD can be reversed slightly after the actual release.

            Whatever happens, everyone should be in front of their screens later on because one thing is for sure: trading will get volatile and exciting…

 

Published on  Wed, Oct 31 2007, 13:00 GMT

EUR/USD, GBP/USD Closer Than Ever To New Highs, Ahead Of FOMC…

Tue, Oct 30 2007, 14:32 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Another day, another wave of selling in all dollar related pairs, with both EUR/USD and GBP/USD being trading high and latter touching Julys highs at 2.0655.

            Yesterday we didn’t have any news in the economic calendar, therefore the lack of data, in combination with return of risky carry trades; saw big moves in all yen related pairs and sterling.

            With tomorrow being the most important day of the week, it is natural that most traders are in a “wait and see mode” as there are clear risks in positioning for, or against the dollar a few hours before the announcement.

            With many analysts predicting a rate cut of 25 points, and markets already pricing in this outcome, the only other way that we will see a big move in all dollar related pairs will be a surprise move by Bernanke and friends. The two other scenarios would be either to leave rates unchanged and therefore give dollar a temporary boost, or cut as much as 50 points like the last time, and so dollar can and will print new lifetime lows.

            With oil nearing $100 per barrel, and EUR/USD almost at 1.45, Bernanke s job is made quite difficult, as whatever his decision will be, the reaction in the global markets is expected to be aggressive either way. The bank certainly doesn’t want to surprise the markets and cause a massive reaction like the September cut, so even if we see a 25 points cut, the rhetoric might be hawkish so the dollar doesn’t get hammered once again. Whatever the outcome, once thing is for sure: dollar will loose ground after the initial reaction as the sentiment hasn’t changed and markets target still is at least 1.45.

            After the Wednesday’s events, let’s not forget that Friday is another risky day with non farm payrolls being the other major event for dollar direction.

             Today, at the time of witting, GBP/USD is printing new multi yearly highs at 2.0665 and it looks like there is room for more gains in the pair, ahead of New York open. This pair is trading with heavy tone and one could argue that there are not a lot of fundamental or even technical signals to support the extreme of this move. House prices and loan applications fell yesterday, with the risk of tomorrow’s nationwide prices being negative again. This, will for sure catch up with the pair and if tomorrow’s decision favors the dollar, pound might get sold aggressively off its highest levels.

            Until tomorrow though, there is still consumer confidence to look at later on, but we don’t think that traders will react much to that, as it is already being forecasted lower and it is widely known that the sentiment is negative…

 

 

 

 

Published on  Tue, Oct 30 2007, 14:29 GMT

FED And Payrolls Will Determine Dollar's Future…

Mon, Oct 29 2007, 11:05 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Another week, another new low for the dollar, with EUR/USD well above 1.44 at Monday open. As the pair keeps trading above 1.44, there is a lot of speculation about how high will it reach before some kind of correction occurs…

            Last week, although we didn’t have much economic news in the calendar, nevertheless the ones we had were really bad for the greenback, with housing numbers printing yearly lows. Market players did sell the dollar at the news, as the risk of further losses in the American currency after a bad economic indicator is almost non existent!

            This week we have plenty of events to keep us occupied, with the FOMC meeting and non farm payrolls being key events for the short term future of the dollar.

            On Wednesday, we also have GDP out of the US, and with the risk of this number coming lower than previous the dollar will probably suffer another wave of selling all across the board. Also we have ISM manufacturing and non-manufacturing for an idea of how the business sector is performing and last but not least our all time favorite non farm payrolls on Friday. The previous number did surprise the markets as it was not only better than expected but also revised better than previous negative number. Market did trade the news in dollars favor to start with, however later on the dollar bears gave way to further dollar losses and in the end the good news seemed like a far fetched dream.

            We see that market is so negative to any news at the moment that even with good economic numbers from the US, there is still losses in the greenback. The very fact that EUR/USD is trading above 1.43 for a few consecutive days, shows that traders have one thing in mind: 1.45 and maybe above…

             The question is what will Bernanke and pals do at the policy meeting? Will they take the “safe” approach and cut rates once again in order to stabilize the housing problems? Or will they leave rates unchanged due to the very low dollar levels and fear of further deterioration in the markets? Their job will be once again very difficult as it seems like whatever they do will have almost the same impact in the markets psychology. If they cut, that might initially be welcomed as relief but later can be interpreted as a panic move from the bank and therefore can be met with a sell off in stocks and equities. If they don’t cut and leave rates unchanged, although initially good for the greenback, global markets will suffer as this move can be interpreted as lack of action by the FED. So, thing to watch is not only what the FED will do, but HOW will the market interpret the action!

            Today Monday there is nothing major out data wise,  therefore as it is the start of the week, we might see some consolidation for the dollar, as it reached again extreme over bought levels at 1.4435. Next level to watch will be 1.4450 and then 1.4485-1.45(important psychological level for all traders)…

 

 

 

Published on  Mon, Oct 29 2007, 11:02 GMT

Dollar Direction Unsure, Ahead of Data…

Wed, Oct 24 2007, 10:40 GMT
by Lena Manousarides

FXGreece  |  View company's profile

What a day yesterday, with all currencies in a correcting mode for most of the day. Dollar got sold off all across the board, with EUR/USD renouncing slowly, from 1.4170 up to 1.4285. The most impressive move though was made by the pound which it out staged any other daily performance. The pair got bid fast and retraced the whole move, making daily highs at 2.0517.

            What a crazy week this has been so far! Monday we saw an aggressive fall in all yen related pairs and also strengthening of the dollar, and then Tuesday we saw almost the whole move reversing for no apparent reason. The lack of economic data in combination with the rally in equities and stocks, made investors wary of which direction to take and so all we saw was rollercoaster moves.

            Today, although we don’t have many releases, the only one in all traders’ minds is the Existing home sales. With all housing data being really poor last week, investors are nervous when it comes to new economic data, as the risk to the downside is more real now, than ever.

            As the time for another FED meeting approaches, traders start to wonder what the next move by Bernanke will be. Most analysts predict that due to negative data all month and further slowing in the housing sector, the bank will cut rates again, as early as next week. Although rhetoric from FED members has been neutral to hawkish when it comes to inflation, one wonders how long it will be till we have another financial crisis. The Bank will have a difficult task once again, trying to calm investors as the problems from the credit crunch are still visible and the recent data show that there is more to come.

            EUR/USD found good support at 1.4130 and since it touched that level, it hasn’t looked back. With the trend in the pair still up, and many traders wishing to buy euro at low levels, there is possibility for another wave of bids, to take the pair back at double top 1.4350. Mondays move though, gave a small fright to euro bulls, as the risk of dollar being bid as a safe haven currency is always there. Let’s not forget, that if there are problems in the global economy, other countries can be hit harder than America and therefore it’s safer to put your money in dollars rather than some other currency.

            It will be interesting to see how the cable performs today, as at the time of writing is near 2.0500 and if it continues the upward move, we might see next level of resistance at 2.0550. It might be a good level for shorts there, with more at 2.0585 and stops above 2.0610.

Let’s see how the market reacts to the data and how they will play the FOMC meeting, from now till the 31st of October…

 

Published on  Wed, Oct 24 2007, 10:36 GMT

Week Starts With Dollar And Yen Strength. . .

Mon, Oct 22 2007, 13:02 GMT
by Lena Manousarides

FXGreece  |  View company's profile

The long awaited G7 came and gone but nothing amazing happened, with the officials being quiet about the recent dollar weakness and euro strength in the world currencies. The only thing that they stressed once again was the need for China to make its currency more flexible and in between words they noted the recent yen weakness.

Market opened with a gap in all yen related pairs and also EUR/USD. The pair closed on Friday at 1.4295 and re opened on Sunday night at new reckord highs 1.4345. The move didn’t find many followers and quickly retraced back to 1.43.

This G7 meeting proved to be a non event, which is why the currencies rebounded at the opening. The lack of comments from officials regarding the recent dollar weakness gave the traders the temporary green light in order to proceed without fear in further bids in the pair.

Furthermore, as the pair is moving to new lows every day, there is more risk to a dollar correction then ever before. However, the next target in everyones mind is 1.45 and clearly the investors will want to at least try and succeed this in the coming weeks…

Today the economic calendar is empty so therefore we might see some consolidation in all currencies ahead of some important economic data later in the week.

This week we have Housing data, with existing and new home sales being the most crucial ones for dollars short term fate. The recent problems in that sector provides a lot of volume when the news are released and therefore if numbers are much lower than already expected we might see further dollar losses. Also, the other news which the market will monitor is durable orders and since its forecasted to print better number, a surprise in the downside will see dollar weakening across the board.

 This week we have some news form Euro zone too, as on Wednesday we have the German IFO release which is expected widely to come lower than the previous one. There is a lot of talk regarding euro strength and how it affects the business climate in the Euro zone area and therefore this number will be very important for the euro bulls that are looking for any excuse to buy the European currency at low levels.

Today, the dollar is trying a little to fight back against the euro, with the pair trading below 1.43 at the time of writing, at around 1.4265. Traders clearly wish to correct the large move which happened at market open and also are chasing better levels in order to get in.

Whatever article you come across these days, in any financial newspaper or website, the only thing you will read is EUR/USD on the way to 1.45. All the noise that has been created from the big banks and financial institutions in order to influence people in selling the dollar might prove to be a sign that when everyone starts to think alike, then the big reversal comes…

Do you think that is possible? Well lets wait and see what this week bring us and how the markets will react if more negative US data arrive…

 

Published on  Mon, Oct 22 2007, 13:10 GMT

CPI Data Crucial for Dollars Direction. . .

Wed, Oct 17 2007, 11:54 GMT
by Lena Manousarides

FXGreece  |  View company's profile

After what seemed like a “stormy day” in all currency pairs, we saw some calm in the pairs, with EUR/USD trading within tight ranges ahead of the very important CPI data. The European trading session started very aggressively yesterday, with yen gaining against the other currencies and dollar the clear winner of the day. The risk aversion which we saw yesterday was related to comments from officials regarding concerns over strong euro and yen weakness. Lets not forget that with G7 only a few days away, there is a lot of uncertainty over the outcome of the meeting and how it will affect the currencies.

Yesterdays data was once again disappointing for the American economy, as we saw negative TICS data for the first time in many years. That was a bit worrying where the markets forecast for the number was 60B, yet the outcome was negative, which means that foreign investors withdrew money from US investments for the month of August. This together with negative NAHB housing index and mixed industrial p[production, left the market uninterested, with  dollar not getting its usual sell off but instead even gaining against the euro. That fact only show that traders are in a wait and see mode ahead of key inflation data and they don’t want to pre commit in any dollar sell off before the actual release.

Today, we have CPI and Housing starts from the US and also the Feds Beige Book later on. The inflation data will be monitored closely by the markets as any sign of higher inflation will give speculations signs that maybe Bernanke will not rush to cut the rates once again, but leave rates the same with the scope to hike again later. Also, the housing data release might have effect on dollar as more disappointing data might be welcomed by dollar bears and give EUR/USD a push back above 1.42.

However, lets wait for the data to come, and even after the release we might see choppy trading and the “big players” getting ready for a bigger move like last week. It is wise to wait for the clear market reaction as days like these, often show fake moves happening.

EUR/USD and GBP/USD are trading within tight ranges over the last few hours and it seems like “something is cooking” for the US open and the data release. A clear break to the downside of 1.4145 might spark more euro weakness and the pair might end up at 1.41 and bit lower. However, yesterday that level of 1.4145 kept very nicely and the pair found support and more buyers which took the currency up near 1, 42. On the upside, any clear break of 1.4245 will have to be seen before we can say that the life time highs of 1.4285 will be tried once again.

 Stay focused on the news and also be aware of any more comments by the “usual suspects” which might once again tell us how worrying the levels of euro, dollar, or the yen are. There are many speculations regarding some kind of intervention this weekend, however lets have in mind that if that does NOT happen, then the market will react accordingly and therefore we might see risk appetite return and euro gaining more against the dollar…

 

Published on  Wed, Oct 17 2007, 11:51 GMT

Euro and Curry Trades Get Sold Off Ahead of G7 Meeting . . .

Tue, Oct 16 2007, 13:46 GMT
by Lena Manousarides

FXGreece  |  View company's profile

What a morning today, with the start of the European session being very eventful to say the least. With Monday being a relatively quiet day, dollar continued its decline against the euro and the pair was trading above 1.42 for most of the day.

However, come Tuesday and we saw the biggest move we have seen for a while in almost all the currencies with the curry trades leading the way, and the yen related pairs being sold off all across the board. What caused this move though? Well, there were comments from Japanese officials overnight regarding concerns over the yen weakness and euro strength. Also, Bernanke in his speech said that FED is still poised to fight inflation which is like saying that they wont cut rates any time soon.

Also, the fact that we are getting closer to Friday, the start of the G7 meeting, makes investors nervous and especially the curry traders, who  want to close risky positions ahead of the weekend, just in case. We believe that during the week there will be choppy trading and big short term moves which will provide a lot of volatility.

Today, we have the TICS data later on, which will show the foreign appetite of US$ investments and the number is forecasted to come out better than last month which was really low at only 19.2B. Lets not forget that the recent trade balance printed 57.6, so any number over 60 would be good for the dollar as it will cover the trade deficit. Also, we have the industrial production data which again will be watched closely by market participants for any signs of slowing in that sector.

The main event though might end up being the NAHB housing index which will be out much later, and which is going to show how bad things are in the housing sector after the credit crunch. The fact that this number is coming lower every month definitely doesn’t do favors for the dollar and it will be interesting to see how the market reacts at the news.

Lets see what the day brings and watch out for the dollar which started to strengthen against the euro and if the very important level of 1.4150 breaks for good then we might see further drop in the pair at 1.41 or bit below that. Again though, as the trend is still up, we might see buying at any levels below 1.41 with the scope of pushing the pair in another upwards move…

Published on  Tue, Oct 16 2007, 13:44 GMT

This Week Crucial For the Dollar, Ahead of G7…

Mon, Oct 15 2007, 10:42 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Another week has passed with dollar still being weak against most of its currencies, with EUR/USD printing 1.4240 and still looking good for more upside moves towards the life time highs at 1.4280.

Last week we had the FOMC minutes which once again didn’t give us a clear insight on the banks plans, however the message that was taken was that FED didn’t want to commit to further cuts anytime soon and that they will monitor all developments before making the final decision. In other circumstances, this news would give dollar a boost but we saw none of that and the dollar still got sold off against the euro. Furthermore, we had retail sales and trade balance which both were positive for the dollar but after the greenback strengthen immediately after the news, the “usual suspects” got in the move and bought the euro both times, leaving the traders confused as to what caused the dollar sell off. We see that as the trend is up and the big players want to see new life time highs in the pair, they use every correction to achieve higher moves

This week we have very important economic data out of the US and Europe, with CPI data being the main event, together with the housing data. The market will be monitoring closely this news as it is very important to see how the economy is performing after the “big storm” that was caused by the credit crunch. Most analysts warn that the problems in the housing sector are far from over and that obviously still weighs in the dollar. Also we have the TICS data which are forecasted to print higher number that the previous and also the industrial production. All eyes will be on those releases as Bernanke and pals have said that they will make further decisions on policy depending on economic data.

It will be interesting to see the European economic news as well, as we have the ZEW economic sentiment from Euro zone, and CPI as well both which will be watched closely in order to see how the economy is performing with such a strong euro.

Lets not forget that this weekend we have the G7 meeting of Finance ministers in Washington. Market players are getting ready for all developments in that meeting as there are several scenarios that want verbal intervention from members of the banks, regarding currencies. Analysts believe that there will be many subjects that will be covered in that meeting and the recent credit crunch will be definitely high priority on the agenda. Also many believe that officials will comment on the currencies with dollars weakness and euros strength being the targets of comments. However, we believe that the banks will be extra careful in whatever comments they will make as they are the ones who claim that they do not like extreme volatility and action in the FX currencies.

One thing is for sure though, if there is any kind of comments expressing concern over the recent strength of the euro against the dollar or yen, then we can expect a lot of trading action and since it’s the weekend and the markets will be closed, we might open with a gap in the pairs like other times in the past.

Therefore, be ready for trading action this week, wait for the news and if possible avoid open positions after the close of New York on Friday evening, as whatever the outcome of the G7, there will be trading action…

 

Published on  Mon, Oct 15 2007, 10:39 GMT

Dollar Sell Off All Across The Board…

Wed, Oct 10 2007, 13:07 GMT
by Lena Manousarides

FXGreece  |  View company's profile

What a day turned out to be Tuesday, after a relatively quiet start during the European session which saw most of the currencies stuck in tight ranges, apart from GBP/USD which was falling all day breaking important 2.0300 and finding a bottom at 2.0270. As the only important news from US was the FOMC meeting, the market was positioning all day for any surprises from Bernanke and his pals.

As we said before, the dollar was strong all across the board since Monday and even threatened to take out 1.40 at some point before giving up all its gains late last night. The FOMC minutes were once again not clear about the banks intentions, but the main message that was passed was that Bernanke and pals are not committing to any more cuts as initially was believed and they are waiting for more data to make final decisions. One thing that they said was that they were “worried “about the recent dollar weakness and what it can do to inflation and generally to the economy. That comment caught the market by surprise initially and the dollar got stronger all across the board in a knee jerk reaction. However, when traders digested the minutes, dollar started to fall again and EUR/USD broke 1.41, printing 1.4115 daily high.

It is so clear that the market players are still in a “hate the dollar mode”, as every chance they get they sell the greenback all across the board and trying hard to regain the recent high levels.

GBP/USD had a different story yesterday, as all day the pair was falling without stop and during the budget statement from UK chancellor Darling, who was very positive when it came to economy growth, the pair started to skyrocket, making 80 points in just a few minutes. What really killed the downtrend move in the pair, was Governor King which in a speech later in the evening , he basically told markets that BOE wont cut anytime soon and against all those who wanted the bank to start easing rates, he said that there were still inflationary risks to stability.

Today, we don’t have anything major coming out of the US, apart from the wholesale sales release later after the US open. It will be interesting to see the number, as a better than expected one, will give dollar bulls some kind of hope that with better data coming out form now on, maybe things are not as bleak for the American economy as everyone is making out to be. However, due to negative dollar sentiment any negative number might lead the pair easily to 1.42 level.

Lets not forget that on Friday, we have the PPI data out of the US, which again will be monitored closely by market participants and also the retail sales which are forecasted to be a bit higher than last month.

Basically, from now on, we need to see what the Fed wants to see: healthier economic data out of the US and return to stability in the housing sector which recently has taken a hit. If all that happens in dollars favor, we might see the dollar strengthening again and finally the so called “dollar weakness” to be decreasing…

Published on  Wed, Oct 10 2007, 13:04 GMT

EUR/USD Ready For 1.40! What's Next?

Tue, Oct 9 2007, 11:44 GMT
by Lena Manousarides

FXGreece  |  View company's profile

This week has started with dollar strength all across the board! The dollar is back! Is it here to stay though? Well so far things for the dollar bulls are looking good, with EUR/USD trading under 1.4050 for most of this morning session and GBP/USD clearly on a downside move breaking important 2.0300 and still chasing the stops near 2.0280.

As we see the dollar correction is clearly underway and as long as the EUR/USD pair trades under 1.4110 there are hopes for further downside move towards 1.3980. As we said though in order to have a reversal in the recent upward trend, we need to see break of 1.3940.

Lets not jump the gun just yet, as more data are coming this week and also this evening we have the very important FOMC minutes from the last meeting. All eyes will be there, as last month Bernanke and his pals cut the rates by 50 points, causing the euro to fall further and print life time highs at 1.4265. Many analysts changed their estimations for further rate cuts as early as next month, what with better than expected payroll data and speeches from Fed officials who are still crying out for inflation. If the minute’s show that Feds move to cut was a one time thing, we might see further dollar gains, as investors will be looking to continue the recent move and hunt more stops from the buyers as they go along!

Today we don’t have anything else, however beware the New York open as traders from the US are all back at their desks and it will be interesting to see how they will “play” the dollar at these levels, as the last few weeks they were always selling the greenback

Lets not forget that later this week we have PPI from the US and also retail sales. So, the dollar is not in the clear just yet and with any indication of negative data, market players will be ready to sell the dollar for another try of its recent lows.

GBP/USD is trading under 2.0300 at the time of writing and if that holds after the New York open, we might see further drop in the pair and tests of 2.0240 which is the next big support level.

EUR/USD stalls around 1.4020 and quickly reverses the move, with the pair at 1.4034 at the time of writing. As long as the pair trades under 1.4055 which is todays high, there is scope for at least the test of 1.40 which if breaks then stops can be triggered and eventually 1.3980 can come into the picture.

 So, lets see how much can the dollar gain this week and when are we going to see 1.40 break before we can start say that Dollar is Back…

Published on  Tue, Oct 9 2007, 11:41 GMT

This Week Will either Make or Break Euros Recent Rally!

Mon, Oct 8 2007, 11:47 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Another week ended with the dollar again on the defensive even after much better non farm payroll data. Let’s see what happened on Friday, with the payroll data being the main economic indicator out of the US. All eyes were on the number which printed 110.000 new jobs for the month. What was really not expected though was the revision of the previous disappointing -4000 to +89000 which took the market by surprise and therefore caused dollar bids all across the board just after the announcement. However the happy smiles of all those who bought the dollar didn’t last long, as the euro bulls took advantage of the 1.4030 lows and started buying euro like there was no tomorrow. We saw the pair moving up towards 1.4150 in no time.

What happened though to cause the dollar sell off on Friday? Well, as we mentioned last week, the trend of the EUR/USD is still up. So therefore, when traders see good levels like 1.4030 what can they do? They cannot help but buy the pair and move the euro towards 1.42. The specific move happened from big Asian and Mid East names that were looking to buy euros at good levels and therefore took all dollar bulls by surprise, when not only they reversed the move but printed new dollar lows! That can tell us many things… That can say that the sentiment is still anti-dollar even after positive data for the American economy. Traders are not convinced totally that the dollar is out of the gloom and they use every chance to sell it.

However, even the bigger dollar bears will have to agree that the recent payroll data gave markets more faith that the economy is not heading for recession just yet, but with better than expected data in the coming days we might start to see dollar gaining against its other currencies and especially the euro.

This week is quite important as tomorrow we have the FOMC minutes which all traders will be monitoring closely for more clues as to what the next move will be. Many analysts start to believe that maybe the Fed will leave its rates unchanged for the coming meeting, especially if the data helps from now on. After the recent cut, many started to make estimates for further rate reduction, in some cases as much as 50 points. However, as the days passed, and with much better payroll data, they have lowered their estimates and the general feeling is that Bernanke and his pals will think twice before cutting again soon.

 

Apart from the minutes, we have the trade balance which is forecasted to come much lower what with the recent dollar weakness helping no end. In addition, we have PPI data, again very important for the rate decision and last but not least our favorite retail sales, which is expected to print a better number than the disappointing one last time. It is important to see how the consumer behaved last month with the recent credit crisis still in people’s minds.

Let’s see if this weeks data is good enough for the dollar to continue its correction, which started last week and still is trying so hard to complete. EUR/USD still looks good under 1.42 and if it continues like that throughout the week we might see 1.4030 again. The later level is very important support and it will be difficult to be taken out, however if that happens then it opens a clear way for 1.40 and maybe under. Beware of comments form ECB and other European officials regarding the euro levels and as we are coming closer to the G7 that will happen soon in Washington, we might hear some complaining about the euro strength which can eventually may make “euro lovers” rethink their buying positions...

 

 

Published on  Mon, Oct 8 2007, 11:45 GMT

Will NFP Save The Dollar From Further Losses?

Fri, Oct 5 2007, 10:37 GMT
by Lena Manousarides

FXGreece  |  View company's profile

The big day is here, with markets getting prepared for the event of the month, the non farm payrolls. All currencies move in tights ranges and its clear that the market doesn’t have direction at the moment as all attention will be turned in the release later this afternoon.

Lets see what happened yesterday with the two rate decisions from the European banks. The fact that BOE left its key rates unchanged, left many investors disappointed as there were some noise that they might cut as early as yesterday. The fact that there was no statement afterwards, like last time, gave the traders the excuse to buy the pound all across the board and make GBP/USD move up around 100 points in a few minutes. Although the general feeling was that rates would be unchanged, however this aggressive sterling buying showed us that investors were positioning themselves for at least some signal that the bank is getting ready to cut. With the recent negative economic data, along with softer CPI, one would speculate that the bank would move towards easing sooner rather than later.

After the BOE decision, it was time for Trichet and his pals, with ECB leaving the rates unchanged too. When the press conference started, EUR/USD was moving sideways waiting for key words to be mentioned and when Trichet failed to use words like “accommodative” or even “vigilant” the pair moved much lower towards 1.4070. When asked by the journalists of what the bank was doing regarding the recent euro strength, Trichet was once avoided clear answers but nevertheless repeated what he already said about a strong dollar stance. Although ECB failed to mention the consequences of a strong European currency in the future decisions, market did take his words as a signal that the bank will pause hiking for now until further signs of inflation arise. All in all, Trichet was dovish and more speculations now arise as to what his next move will be.

EUR/USD is still trading under 1.4175 and if data today help, we might see a continuance of the latest correction that the dollar started this week. However, beware of fake signals after the data, because with euro being in these levels anything is possible. All forecasts want the payroll data to be better for the greenback with 100000k new jobs being added last month. After the negative number we had last month, any improvement will help, however due to the negative dollar sentiment we need to see a very good number in order to regain some kind of confidence for further dollar gains.
 
Many analysts believe that although the sub prime crisis is far from over, they still see the economy starting to peak up in the next months and therefore Bernanke and co won’t proceed in many more cuts as initially was thought. That will certainly help the dollar regain some ground against its other currencies and EUR/USD move towards 1.40 rather than 1.45.

However, please don’t think for once that the EUR/USD trend is anything but upwards. In order to start thinking reversal we need to see at least 1.3830 being taking out and the euro to stay under 1.42.

Before we start saying things like “dollar is the new way to go”, lets see first what todays news bring and next what the inflation data will be in the coming weeks…

Note: It will be advisable to stay out of the market before the news, and even then if the number is mixed, wait for a clear signal which is usually given at least 15 minutes after the announcement…

Published on  Fri, Oct 5 2007, 10:34 GMT

Dollar Strong Ahead of ECB Rate Decision…

Thu, Oct 4 2007, 11:24 GMT
by Lena Manousarides

FXGreece  |  View company's profile

The correction did happen… EUR/USD did break 1.41 last night near New York close and all dollar bulls seem to be jumping with joy! However, is that it? Do we have more dollar gains to look forward to? Well, let’s wait and see what today brings us what with two very important rate decisions and a statement by Trichet the key events for the day…

Let’s see what happened yesterday. As we mentioned yesterday, the correcting did started with EUR/USD dropping below 1.42 and then find some resistance at 1.4160 which kept the pair for most of the day before the ISM data. As we said yesterday, a better number might trigger further dollar gains and the pair could try to break important support at 1..4135..Fortunately for dollar bulls, data did help the correction and we even saw 1.41 break with the pair trading within 1.4080-1.4095 for the rest of the session.

As long as 1.4185 holds, the possibility for further gains in the dollar are still there.

However, today will determine the short term fate of the dollar as ECB will give us more clues about what are their plans for further rate hikes in the near future. The scenarios want rates to be unchanged and Trichet to be more dovish what with recent crisis and euro above 1.40 to be clear distractions to their original plans. We believe that Mr. Trichet will once again be vague and not wanting to reveal their real intentions, however he will use his words carefully and avoid the V word (vigilant) at this stage, what with continuing pressures regarding the recent strength of the euro being heard from several members of the European Union.

The most likely scenario will be for the rates to be left unchanged and his statement to be more dovish than anything else, as most of the economic data from Euro zone were disappointing. Many market players even suggest that the bank might change its tightening view very soon, and therefore start easing rates in the next months. Before we draw any conclusions, let’s wait and see what happens this afternoon.

EUR/USD trades within tight ranges ahead of Trichet press conference and traders want to hear what he says before entering new long positions at those levels.

Let’s not forget that the uptrend in the EUR/USD is still intact and if Trichet doesn’t signal a cut, euro bulls might find new opportunities for longs since the pair has corrected nicely and offers attractive buying levels under 1.41.

 Another event to watch is Bank of England s rate decision which again is widely awaited to remain unchanged. Remember that in the last meeting, the bank unlike its policy which doesn’t include release of any comments, did give us a statement stating the problems that the country faced because of the Northern Rock crisis. That was conceived as negative from traders and we saw the pound weakening all across the board. Today that can easily happen if we see a similar statement afterwards.

So, be ready for an interesting day with many events unfolding and watch out the dollar at those levels, for more signs of strengthening, if today’s and tomorrow’s events work in its favor…

 

 

Published on  Thu, Oct 4 2007, 11:27 GMT

Currencies Consolidate Ahead Of Rate Decisions...

Wed, Oct 3 2007, 10:02 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Tuesday, proved to be the first real correction in all dollar related pairs, with the greenback finally showing some strength with EUR/USD dropping from 1.4285 down to 1.4135. The move started in European session, amid comments from ECB officials regarding worries of strong euro and also bad Euro zone data coming out during the day. The move proved to be short lived though as more negative US data hit the wires, with pending home sales dropping again for another month. That gave traders new appetite for dollar selling, driving the pair back to 1.4180.

Today is a new day though, with the pair still clearly under 1.42 and more hopes for further correction in the pair still in tact. The news for today are the ADP report which will give us some idea about what the Non Farm Payroll number will be on Friday. This morning we had various rumors hitting the wires about the number being below expectations but we will have to wait and see. In the past few months, this report was not very accurate as many of its estimates were the exact opposite. However, at the time of the release it seems to give some volatility until traders forget the number and concentrate on the real thing later this week. A very negative number might put the dollar back on the defensive as any bad sentiment might renew short term dollar selling. Furthermore, we have the ISM Non Manufacturing, which once again is forecasted lower than previous and might again give some action after the release.

However, with tomorrow’s rate decisions being the event of the week, we might see choppy trading today with currencies not having clear direction wither way. Traders wont risk taking positions ahead of Trichet's speech and with speculations that BOE might start easing rates sooner rather than later, it will be interesting to see what the Bank of England will comment after the decision.

As long as the EUR/USD holds under 1.4210,the dollar looks good for further gains and if the data later help we might see the pair trying 1.4135 once again with 1.41 an immediate target. Anything above 1.4210 renews fears of higher lifetime highs…

Published on  Wed, Oct 3 2007, 10:00 GMT

Today's move− Short Term Correction or Something Deeper?

Tue, Oct 2 2007, 13:02 GMT
by Lena Manousarides

FXGreece  |  View company's profile

 

After a quiet day yesterday, with the only important economic indicator being the ISM Manufacturing, the currencies moved in consolidation mode for most of the trading day with EUR/USD trading much lower from its lifetime highs at 1.4285.

The ISM news was again worst than expected, however the market didn’t show any interest and decided not to continue the sell off in the dollar at least before the rate decisions on Thursday.

Today, we have only pending home sales from the US; and the market will pay great attention on the number for more idea of how bad the housing sector is. After all, with the recent credit crisis every little bad number counts!

It is very interesting to watch EUR/USD today, as it has started its correction from 1.4235 and haven’t looked back since. At the time of writing the pair is hovering at 1.4145 and seems to trade with heavy flows ahead of the data. The question though is if the correction we see is just a small needed one or something deeper? Can this move sustain bigger winnings for the dollar? Well as long as the data don’t come out very negative and the sentiment continues in dollars favor, the greenback might start to have something to smile about.

However, beware of the big bad wolf: the euro, which is still in a buying mode and opportunities like today can be easily used by traders to enter new longs in a better price for another target of 1.43.

As we all heard yesterday, Mr. Trichet made known that he will press the other countries for a strong dollar in the next G7 alongside Treasury’s Paulson. Today, there were other European officials like him that stated that a strong dollar is in US interests… What is going on? Did they just remember the statement that the US treasury Paulson always uses and use it? Do desperate times call for desperate statements? Well, time will tell and also Thursdays rate decisions by BOE and ECB.

All market players will be watching closely Mr. Trichet s comments on Thursday, after the announcement. Trichet will be wary of his comments and with euro at high levels not only against the dollar but against the yen; he might not continue his bullish view when it comes to hiking again any time soon. Lets not forget that Mr. Trichet is not famous for his transparency so he might once again try to confuse the markets by giving out mixed signals. Lets face it, that has happened so many times in the past. Nevertheless, many analysts predict that the recent financial crisis together with high euro levels might make ECB officials dovish for the next few meetings maybe till the end of the year.

Watch out GBP/USD which doesn’t seem to follow dollars correction path and still trades within 2.0385-2.0425. Many traders don’t want to commit selling or buying the pound just yet ahead of the BOE decision, so as the days are passing we might see a clearer picture in the pair’s direction…

So, lets wait and see how the dollar performs for the rest of the day and before you commit to either way remember: Rate decisions and Non Farm Payrolls are coming at the end of the week! Nothing is determined before those events…

 

Published on  Tue, Oct 2 2007, 13:00 GMT

Will This Week Help Dollar Recover?

Mon, Oct 1 2007, 13:05 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Another week, another new low for the dollar.  The EUR/USD printed 1.4280 in an aggressive move higher on Friday late New York trading. The day started with the pair moving sideways near 1.4170, but just after the first data came out of the US the pair moved much higher, threatening levels of 1.42.  An early rumor that the Chicago PMI will be under 50 gave new selling appetite and therefore made the pair breaking 1.42, settling at 1.4220. However, the actual number was better than expected but that didn’t manage to stop the upside move and instead found even more buyers at those levels, eventually breaking resistance at 1.4250 and moving even higher at 1.4175.

This move certainly took many by surprise, as many believed that the closing trading month and data not being as bad as expected, would give the dollar some room for correcting before new highs were printed. The moves in GBP/USD and EUR/USD though showed nothing but that of traders positioning themselves for more dollar selling all across the board. That, combined with thin trading conditions after London closing, gave the speculators the okay to push the pairs even higher and to hunt stops like there was no tomorrow.

All analysts now, wherever you read, give the dollar some nasty near term scenarios. Everyone is talking about EUR/USD going 1.45; others even suggest 1.50 is on the cards. However, let’s see what this week bring before speculating about how high the euro can climb against the greenback.

This week we have many important economic indicators out of the US and the Euro zone. Attention will be paid once again on Friday as we have the payroll data out of US. Let’s not forget that the fact that the previous negative number was the start of the recent dollar collapse. This month, analysts are a bit more positive due to the latest analysis predicting around 100.000 new jobs. If this happens, it might help the dollar short term as it will give some kind of hope to those who still believe that the dollar will rise against all odds.

However let’s not forget Thursday, with the ECB monetary decision regarding rates being the other event that traders will monitor fully. It is widely expected that ECB will leave rates unchanged, but all will be decided in the accompanying statement. Mr. Trichet is holding the euros fate in his hands, as the European currency has appreciated and it makes us wonder how the bank will handle the recent rise above 1.40 when it comes to inflationary risks.

 On one hand the recent Eurozone data shows that the economy is not performing at its best, given the recent rise, but on the other hand the inflationary risks are still intact with Germany printing high numbers on the CPI index. Many even suggest that Trichet might do a Bernanke and cut the rates instead, but until that happens we will just have to be patient and see.

The Bank of England has its meeting this Thursday and as the day is coming closer; more noise comes from those who see BOE being dovish when it comes to future rate hikes. Again, if the bank suggests a pause and maybe easing until the end of year that will reflect on the pound which has too appreciated in the last week, even though fundamentals are not helping.

Basically, watch out for the economic news this week and with EUR/USD and GBP/USD at such overbought levels; be ready for clear signals of correction if data and monetary decisions allow for this to happen.  Technically speaking, the pairs still point higher to more extreme levels and nothing so far has changed the uptrend, especially in EUR/USD, so beware, because any small correction in the pair might be used by speculators to continue the “euro trip” even higher.

 

 

 

Published on  Mon, Oct 1 2007, 13:04 GMT

Dollar's Future Determined This Week!

Fri, Sep 28 2007, 13:40 GMT
by Lena Manousarides

FXGreece  |  View company's profile

Another record high for EUR/USD at 1.4188 we had yesterday, with the pair just a few pips away from 1.42. The move occurred yesterday just after the GDP numbers, which were printed slightly, lower than expected. The markets were waiting for the housing data in order to have a clear idea of how bad is the Housing sector but when a rumor hit the wires 1 hour before the release, we saw aggressive selling in all dollar related pairs. The rumor wanted new home sales to drop below 10% much more than the forecast and all traders panicked and started liquidating more risky positions just to be on the safe side when the actual news released. However, when the news came, the drop in the number was not as bleak, printing 8% drop, and therefore traders bid the dollar with EUR/USD correcting almost 30 points. This is what we call a “buy the rumor sell the fact” move and therefore the pair consolidated down to 1.4135 before further buying.

As we see, the market is ready to sell the dollar in a snap as the sentiment remains low for the greenback and with any excuse we see more upside appetite for the pair.

Today we have a few economic data out of the US, with PCE core, personal spending, consumption being the first news to hit the wires. All forecasts are lower than expected, but the question is what the reaction will be after the announcement. Furthermore, we have Chicago PMI and consumer confidence, with the latter being very interesting in order to access the consumer’s evaluation of all the things that happened in the previous month. If we see a better number than expected that will give some faith back to those who believe that all is lost for the American currency.

It is vital to mention that today the traders are closing their books for the three month period, and therefore we might see a lot of volatility in all pairs, what with traders taking their profits and liquidate their positions. That is why we still might see another try for 1.42 and maybe a bit higher if stops are triggered. However, at those levels selling positions are favored with a short term correction in mind.

Nevertheless, next week will play a very important role for the dollar, as there are very important news that will determine its direction. First of all we have the ECB rate decision where we shall see what Mr Trichet says about future policies and non farm payrolls which will either make or break all those hopes for a dollar comeback!

 Many banks now like UBS or Barclays start to hint that dollar weakness in not going to last long and advise their clients to act accordingly. We shall see if this actually happens, although with EUR/USD at such levels the correction bells are starting to ring.

Watch out for the news which come out very soon, and whatever positions you take, have in mind that with today being last trading day of the month, we might see some corrections in whatever extreme moves we might see in the course of the day…

 

 

Published on  Fri, Sep 28 2007, 13:39 GMT

Will More Negative Data Confirm 1.45 As the Next Target?

Thu, Sep 27 2007, 12:28 GMT
by Lena Manousarides

FXGreece  |  View company's profile

EUR/USD yet again printed a new high at 1.4166 early this morning after the start of the European session. However, the move was more influenced by the pound which took GBP/USD up almost 100 points at the same time, rather than euro strength. That confirmed as the pair corrected immediately back to 1.4130.

 After a very quiet day yesterday, with all currencies staying put, EUR/USD flirted with 1.4150 before the US session but didn’t manage to stage any impressive rally and in sated was hovering around 1.4130 for most of the trading day until the New York close. All attention was at the US durable Goods which came disappointing once again but proved to be a false alarm for euro bulls as the pair stalled and then even dropped 30 points. For the first time in a long time, the disappointing news didn’t spark dollar sell off and that was perceived as “suspicious” by the markets. For the rest of the day there was nothing really going on, with EUR/USD stuck in a 10 pip range.

After the calm day yesterday though, today we had the storm as currencies rallied early this morning with EUR/USD moving once again towards 1.42.

The important events of the day will come later this afternoon, with GDP and New home sales out of the US. Both of the news is expected to be worst once again with home sales very critical for traders after the recent credit crunch. Once again we will say that any surprise to the upside in these releases will give dollar some relief and might even make investors more confident that not all is lost regarding the American economy.

With all the scenarios we read every day that want the US economy near recession and dollar near the end, it makes it difficult for traders to concentrate in their positions, with fear and panic taking control of the trading and risk of losses being bigger than ever. Most analysts from big banks give us their estimations saying that they see EUR/USD at 1.4250, with others even mentioning 1.45 and more. Lets please not forget that its not just about the low dollar but its about the high euro too. At the moment the US government seems to prefer dollar weakness in order to heal a few sectors of its economy as if the dollar is cheap it makes it better for the exports and also businesses with foreign earnings can make profits by converting to dollars.

On the other hand though, a high euro will have consequences for the European economy and therefore the higher the euro moves, more chances for slowing in the economy arise.

 

Lets see today what will happen after the news and what the reactions will be if the numbers come negative again which is most likely scenario. The question is will we see 1.42 today? Well, if all data come worse than expected, then market players will justify buying the euro at these levels and eventually we shall see 1.42 if not today then maybe tomorrow before the close of the week.

Do not forget that tomorrow is the end of the month and also the end of the 3 month period for the longer term investors and therefore we might see some profit taking and squaring of positions ahead of the new month. So basically use any rally near 1.42-1.4225 for sell opportunities as come Friday traders will liquidate before new positioning happens…

 

 

 

 

 

 

 

 

 

Published on  Fri, Sep 28 2007, 13:35 GMT

Yesterday EUR/USD and USD/CAD make historic moves

Thu, Sep 27 2007, 08:28 GMT
by Lena Manousarides

FXGreece  |  View company's profile

What a day we had yesterday with EUR/USD and USD/CAD making historic moves and taking the dollar in multi year lows. We had a very busy trading day hat with many events and speeches that made currencies very volatile. We had Bernanke and his testimony in front of the House which turned out to be not very insightful as he once again didn’t comment about his next move but only said that the cut was done to stabilize markets after the recent financial crisis. Also we had Paulson and Bush speaking with both trying to calm everyone by saying that American economy is still strong, fundamentals are still strong and generally everything is hunky berry. Paulson acknowledged at some point the severity of the recent sub-prime mortgage crisis and said that the way to avoid further problems is to be aware of risks when it comes to loans. However, the more they talked, the weaker dollar was getting with EUR/USD making a move towards 1.41. The move wasn’t sustained however with the pair falling to 1.4070 near the New York close.

This morning however, traders came back with a vengeance and finally made their long awaited move above 1.41 with new record highs printed at 1.4119 before consolidating.

Today we have an empty US calendar with a few speeches from Central Bankers including Trichet and Roth.

As its Friday, last day of the week we might see traders squaring up their gains from recent moves and therefore some consolidation in EUR/USD and USD/CAD. However do not think for once that euro bulls are going anywhere just yet. The next target in everyone’s minds is 1.42 and they will try hard to achieve that in the coming days.

It will be interesting to watch for any comments from ECB officials regarding recent euro strength; however the lack of concerns might give the okay for market to take the currency even higher. It will all be data dependant from now on as the German IFO is approaching and other important economic indicators form Europe. If we start seeing signs of economy slowing due to the heavy currency then speculations will start to come in effect about ECB not moving to further interest rate hikes.

The question now that is in everyone’s minds is: How low can the dollar fall before starting to regain its losses? Well with oil above 83 and fear of further slowing in the economy, we might see further weakness in the days to come until there are clear signals that greenback is starting to gain some lost ground.

We believe that with the recent financial crisis coupled with a 50 points rate cut by the FED, dollar might delay the needed correction in EUR/USD and USD/CAD, and the uptrend and downtrend respectively might continue for some time…

However, be aware that dollar bulls haven’t said their final word and when nobody expects it they might come back and give dollar some lost strength that is long needed…

Published on  Thu, Sep 27 2007, 08:25 GMT

EUR/USD ready to break 1.39?

Fri, Sep 21 2007, 08:55 GMT
by Lena Manousarides

FXGreece  |  View company's profile

What a day we had yesterday, with EUR/USD trading near lifetime highs at 1.3850 and keeping a buoyant tone throughout the day. The only economic indicator out of the US was the trade balance, which was a little worse than expected, but left markets uninterested. All market participants had their attention turned to both Trichet’s and Bernanke’s speeches for further signs of monetary policy decisions.

We saw choppy trading ahead of the speeches, with EUR/USD moving higher near 1.3840. Trichet started his speech on a positive note, trying to calm the investors by saying that the European economy still performs well in spite of the recent market turmoil. His tone was reassuring and he even implied that more hikes might be imposed if the inflation persists.

These words, in addition to a bearish Bernanke, gave the excuse for further selling of the dollar all across the board. He acknowledged the fact that there were problems in the economy and once again he wasn’t clear as to what the FED would do next week. However, many analysts took these half words as a hint to a cut at the next meeting; as much as 50 points.

In reality, the Fed’s job is very difficult at the moment. Whatever the decision, it will have a negative impact short term, with dollar being at its lifetime lowest against the euro. The fact remains that market players are still reluctant to commit either way as there are still fears of further problems in the credit sector.

Today we don’t have any important economic news so we expect to see the market simply digesting yesterday’s comments and waiting for more at the end of the week.

Watch out for the EUR/USD pair as it is moving higher towards 1.39. In addition, USD/CAD is moving lower near the 30 year lows of 1.0340. The fact that the oil is trading in such high levels, close to $80 a barrel, gives strength to the Canadian currency and making speculations of new highs near $100 to be back on the table!

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Published on  Fri, Sep 21 2007, 08:52 GMT

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