Forex Blog

EUR/USD trend: buy.
GBP/USD trend: buy.
USD/JPY trend: hold.
EUR/JPY trend: hold.

With the consumer confidence surveyed in this September fall beneath the level of 1985 (from 105.6 to 99.8) the U.S. dollar can’t hold its position and loses almost 100 pips on EUR/USD rallying it to a new historical maximum at 1.4154.

While mortgage problems in U.S.A. continue to crush real estate sector throwing existing home sales to 5.5 millions in August (in July this number was 250,000 higher), consumer confidence - one of the main indicators of economy potential fall below any expectations by almost 6 points.

Considering the latest FOMC decision on interest rates it is not really hard to predict their reactions if today’s news releases will set a tendency for the next month, leaving Fed with bad macroeconomical data. Then another 0.50% can be cut by the end of 2007 and EUR/USD may pass 1.4500 level without a stop.

With the Fed’s rather predictable decision on interest rates cut by 0.50% September 18 (last Wednesday) dollar was doomed to cross the 1.4000 level (on EUR/USD). Its fall continued through all days left after the Fed’s statement release. Hitting historically high levels with the maximum at 1.4120, USD ended last week above 1.4000, thus opening further opportunities for the EUR/USD to go to the new maximums.

This week can show (or maybe even it should show) some correction - fall back to 1.3900-1.4000 level is possible, but it is very unlikely that EUR/USD will close below 1.4000.

The main question is if the EUR/USD has enough vigor to rally to 1.4500? Or does its potential end in the low 1.4000-1.4100 levels? If we look at USD interest rates - they are still quite high. 4.75% provide a lot of place for the Fed to cut them in order save the stock and real estate market bubbles. On the other hands with the explosive end of all carry trade and consequential inevitable U.S. real estate sector collapse, Fed can decide to stay away from interest rates and with the fall of stock market USD will rise. But it is very unbelievable scenario for it to happen before the end of 2007. So, the best choice for now is to look at Fed and stay bullish on EUR/USD as long as Fed keeps on saving the financial markets, not the dollar.

Today I am presenting a new article about Forex trading - 100% Hedging Strategies. As the title suggests the whole article is dedicated to earning money on Forex via hedging different currency pairs and different interest rates. Author Yannis Karamanakis gives a simple list of steps needed to perform a successful hedging trading on Forex market.

EUR/USD trend: buy.
GBP/USD trend: buy.
USD/JPY trend: hold.
EUR/JPY trend: buy.

EUR/USD trend: buy.
GBP/USD trend: hold.
USD/JPY trend: sell.
EUR/JPY trend: hold.

EUR/USD is closing below 1.3900 level after a major rally earlier this week. The main driver for the growth were the market expectations for the FOMC to lower the interest rates by at least 0.25% next week, while last two days’ correction can be a reflections of some less confident traders, that are sure that if FOMC won’t lower rates or will stay with 0.25% decrease for a longer period, then markets will have to play back current growth. Lack of surprise data helped the second type of traders today.

U.S. export (excluding agricultural) and import (excluding oil) prices changed by 0.1% and -0.1% respectively in August, while July brought -0.2% and 0.1% respectively.

Retail sales were up by 0.3% in August, which is lower than both July growth by 0.5% and the same expected value for August.

Industrial capacity utilization in August remained at the 82.2% level as it has been in July, while the market was expecting decline by 0.2%.

Manufacturers’ and trade business inventories rose by 0.5% in July compared to 0.4% growth in June. This is a slightly more optimistic number than 0.3% growth expected by the market.

This week EUR/USD rallied to the new historically high levels breaking above 1.3900 level (and staying there for some time). Possible rate cuts series in the nearest future by Fed caused this dollar fall. Almost 75% of expert currency trading analysts questioned about Fed’s decision on 18th of September are sure that Fed will cut rates at least by 0.25%. Many expect 1.00% by the end of 2007. This heats the stocks market, but cause dollar to go south against EUR, JPY and ПИЗю

U.S. Treasury reported its monthly statement on U.S. budget showing $116.9 billions deficit - more than $30 billions worse than expected and more than twice worse than previous year for August. Nevertheless, EUR/USD is fluctuating near 1.3900 level and didn’t jump up on this news.

Initial jobless claims for the previous week came out at 319k - better than expected 325k, but still worse than previous 315k.

A new e-book is now available for download from my site - it is called “The Daily Fozzy Method” (written by Michel Dunbar from http://www.forex-rewards.com). It describes a Forex trading strategy based on D1 timeframe with RSI, ATR and 28-EMA indicators. It is very simple to follow with the entry and exit techniques thoroughly described in this e-books. A good starting strategy e-book for the new traders that wish to trade on daily chart rather than hasty intraday charts.

EUR/USD trend: buy.
GBP/USD trend: buy.
USD/JPY trend: sell.
EUR/JPY trend: hold.