Monday, March 23, 2009
Mar-23 Daily forex analysis
| by: Forexyard Economic News USD USD Strength Not Likely to Return this Week Last week's decision by the Federal Reserve to buy up U.S. Treasury securities has generated one significant result: an across-the-board sell-off of the USD. Jumping an unprecedented 334 points against the EUR directly following the announcement last Wednesday, the Dollar has continued to take hits through the end of last week and today. Two primary results occurred as a result of this sell-off. The first, as was just mentioned, was a volatile decreasing movement in the Dollar's pairs and crosses. The second was a subsequent rise in the value of commodities like Crude Oil, which hasn't seen such an upward movement since September. With the global economy worsening consistently over the previous few months, major economies, such as the United States, are taking whatever measures they can to salvage their economic systems before a collapse takes place. One investment maneuver undertaken by many traders during economic hard times is to invest in a safe-haven currency, like the USD. This explains the influx of Dollars being purchased over the preceding months, which likewise drove the value of the USD to an inflated high. One perception of the recent turn of events might state that the USD is not crashing down or weakening, but rather, returning to its more realistic value. One thing many forex traders can be sure of is that the downward movement of the USD is not likely to cease in the short-term. At the moment, the U.S. Federal Reserve is basically printing almost $1 trillion worth of new currency. Regardless of any speculation about future price levels, the present moment dictates that the greenback must come down, at least for now. The economic calendar might lend some strength to the USD in the form of potentially positive housing data, however. Could this information be enough to prevent the continued fall of the Dollar? EUR Will the EUR Hold its Recent Gains? A bullish EUR appears to be the order of the day lately. After the U.S. Federal Reserve announced its quantitative easing program, the EUR climbed to a high not seen in months against its primary currency rival, the USD. Shooting above the 1.3700 mark last Thursday and Friday, the pair appears to have settled down slightly at the beginning of this week starting with a small increase in value from 1.3582 to 1.3656 so far. Against the Pound, the EUR has also seen some small gains in today's early trading hours; currently trading at 0.9416. While many analysts anticipate the USD to grow significantly weaker in the coming days, there is also talk of similar quantitative easing strategies being implemented in the Euro-Zone by the European Central Bank (ECB). If such a move were to be taken by the ECB there is a possibility of a mad dash to sell-off the EUR similar to what occurred to the USD last Wednesday. Could there be a race to the bottom between these 2 currencies? Most importantly this week, traders are going to see a sizeable amount of economic data from the Euro-Zone, primarily on Tuesday with the announcement of multiple French and German manufacturing and production figures. If we see a continuation of negative data from this region, there is a high possibility of the Euro-Zone implementing measures similar to what the Fed did for the U.S. economy. If this happens, expect the EUR to put a halt to its recent gains, and most likely reverse against most of its pairs and crosses by sometime this week or next. JPY Yen Weakness Prevalent at the Start of this Week The JPY has seen some odd behavior this past week. Appreciating against the USD directly after the announcement of the Fed's new quantitative easing program, the JPY actually lost value against most other currencies. This highlights two important analytical points. First, the USD's recent weakness is due to the Fed's program and not a coincidental strengthening of other currencies. Second, the JPY is in fact weakening as a result of monetary policies undertaken by the Bank of Japan (BoJ) recently. Trading up at 96.38 against the USD, and down at 131.82 against the EUR, the JPY may actually begin to post steady losses throughout this week due to recent actions by the BoJ to lower the value of the Japanese currency in an effort to boost exports. A steady release of economic figures this week may demonstrate the inherent weakness of the JPY and thus push its value lower against all currency pairs, or it could show that the Japanese economy is beginning to rebound and thus spark a trend reversal for the Yen. Only time will tell. OIL Oil Rises beyond $50 a Barrel; Upward Movement to Continue? As part of the weakening USD seen last week, the price of Crude Oil has seen a corresponding increase in value. The price for a barrel of Crude Oil climbed above the $50 mark last Friday and appears to be continuing in an upward direction. No doubt the quantitative easing taking place in the U.S., thereby weakening the Dollar, has carried an impact on the price of this commodity since it is traded in Dollars. Secondly, the price for a barrel of Crude Oil is affected by supply as much as it is affected by the strength of the USD. With production cuts beginning to take effect, the Organization of Petroleum Exporting Countries (OPEC) has declared that Crude Oil prices appear to be stabilizing and may return to a more suitable price level in the nearest future. As long as the USD continues to weaken and equity markets remain in a somewhat bullish posture, the price for a barrel of Crude is not likely to go south anytime soon. Technical News EUR/USD After touching a base at 1.3724, the pair now is consolidating a bit higher near the 1.3680 level. All oscillators show that the bullish momentum will probably continue. The Slow Stochastic of the 4-hour chart is showing no crosses in the horizon, and the bullish momentum there appears to be intact as well. On the daily chart, this pair is still trending upwards and there are no imminent indications of a reversal. Therefore traders can maximize profits by entering steady long positions. GBP/USD The Cable has resumed its bullish trend and is attempting to breach the 1.4585 level. Should the breach take place, the pair might further extend its bullish run, with a potential price target of 1.4620. USD/JPY It seems that the pair has limited its bullish correction after testing the 98.94 level. Currently a bearish cross took place on the hourly chart's Slow Stochastic. The resumption of the bearish trend looks possible. Going short with tight stops might be the right strategy today. USD/CHF The pair's movement is quite moderate and characterized a slight bearish move. Indicators on the 4 hour level shows mixed signals, as the daily studies are still a bit bearish. Waiting for a clear signal on the hourly level before entering the market might be wise. NZD/USD The pair is in the middle of a strong bullish move ever since it peaked at 0.5283, and is now traded at 0.5663. The pair continues its nonstop upward journey overlooking every possible support level and shows no sign of a stop. All oscillators on the daily chart are still bullish and the trend appears to have more room to run. Forex traders should note that being long on the pair appears to be a wise move for the day. Labels: Forex Analysis, forex signal, Forex Trend, Market Analysis, Market Trend, money trading |
posted by Matbank at 8:23 AM
