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Forex Daily Analysis

USD Fate to be Determined by Rich News Week.

Mon, Apr 23 2007, 05:49 GMT
by Lee More

ForexYard

Economic News
   
USD

It's going to be an interesting week for the Greenback as US markets will be in focus due to several important releases. The first releases are the US Consumer Confidence and existing Home Sales on Tuesday. Both figures are expected to come in a bit lower than last week, and if a strong figure will surprise up than we might see the first positive US signals after the ongoing rally down.

The USD will continue to be in focus on Wednesday when the US Durable Goods will be released. Analysts are expecting a high figure 1.1% for the core figure after a negative previous figure of -1.0%. New Home Sales will release a bit after and is widely expected to shed some positive light on the weak housing market. The week will end with the release of the Annualized GDP Deflator which is expected to come in at an impressive 3.0% with a previous figure of 1.7%. As for today no major news is expected to come out, and traders will standby for the following two three days. Wednesday night should also be in focus as the NZD interest rate is going to be published, which normally generates abnormal volatility on kiwi pegged currencies.

It seems like all the USD needs is a short flow of positive figures to stop the ongoing unstoppable downhill ride. If we see those first drops of strong data, than it might be the redemption week for the US economy.

EUR

The European market was booming last week as the EUR/USD topped at 1.3630 and the GBP/USD touched the unbelievable 2.0100 level. Most news events that came from the Euro-Zone were solid, and the record prices were caused mainly due to the ongoing USD weakness.

The French election is making headlines and results will be known in the following days which might affect EUR behavior, yet will no doubt be overshadowed by the very important German IFO on Wednesday. The GBP GDP is also expected on Wednesday which together with the German IFO and the US Durable goods and Home Sales Data, is expected to deliver a very interesting day regarding price movement and volatility.

There are no major news events expected to be released in Europe today, as traders will pay close attention and focus on US centered events this week.

JPY

After a choppy week for the JPY all across the board, it looks like a strengthening move is imminent as seen overnight. Although the correction seems inevitable, carry trades will probably continue at full throttle this week. The Japanese market will be expecting numerous major economic events this week such as the Trade Balance, the CPI, Manufacturing PMI, Retail Sales, and most importantly the BOJ rate decision, which is most likely to remain unchanged at least until June.

As in the rest of the world markets most of the action will be concentrated on Wednesday, as the week will probably be launched on quiet waters before the big storm ahead.


Technical News
   
EUR/USD

The daily chart is clearly bearish as the RSI is at 84 and the Slow Stochastic is crossing 88 with negative divergence. In addition the 4 Hour chart Slow Stochastic is crossing at 20, and together with a falling wedge may strengthen the notion of an upcoming bullish trend.
   
GBP/USD
   
A tight channel of 1.9991 - 2.0069 is observed on the 2 Hour chart as a breach of one of those barriers may establish a further trend north. Range trading is expected when most of the hourly indicators are sailing into neutral territory.
   
USD/JPY
   
The 4 Hour chart is indicating that the aggressive bullish trend has come to an end, and a bearish trend is forming. It seems that there is not much steam left in the trend for a significant support breaking which is located at 117.61.
   
USD/CHF
   
Daily indicators are in a neutral territory and high volatility is expected. On the 2 H chart a descending triangle in a down trend which may implies an upcoming support breach which is located at 1.2036. This might take the pair to test the 1.2000 barrier which is a very strong support, and unlikely to be breach today.


The Wild Card
   
GBP/NZD

After a bottom of 2.6780, and a very strong bullish cross on the slow stochastic, forex traders have a great opportunity to get into the reversal move after a strong downtrend. It looks as if the hourlies support the strong daily bullish notion, and we might see a very distinct fresh uptrend.

Published on  Mon, Apr 23 2007, 08:03 GMT