Dollar falls again but can’t make new lows

EUR/USD

Well the Euro did end up dropping slightly today but it didn’t quite get to 4600 like I had hoped. Instead the pair rallied back up and hit 4700 but was once again unable to break that barrier. This makes the 4700 mark look like a good resistance level. The extended bearish divergence on the 4hr chart is still in play and both 4hr and daily stochastics have a downward looking slope. In my eyes, I still see a drop for this pair and I would look for it to continue falling to 4650 and even 4600 by tomorrow.

GBP/USD

The Cable managed to fall to 2.1000 like I said it would yesterday, but instead of continuing its fall, it managed to rally during the later part of the day and climb up to 2.1100! I’m still seeing a nice bearish divergence on the 4hr chart and both 4hr and daily stochastics are in overbought territory. I’m sticking with my pro-Dollar theme and am going to look for the Cable to drop back down to 2.1050 by tomorrow.

USD/CHF

The Dollar wasn’t able to rally up against the Swissy today like I thought it might, and instead it dropped right back down to its support at 1250. The bullish divergence is still present on the 4hr chart and both 4hr and daily stochastics are in oversold territory. I am expecting this 1250 support to hold and I would watch for the Dollar to make it back up to at least 1300 some time tomorrow.

USD/JPY

The Dollar continued to drop against the Yen today and fell to 112.00 before retracing back up to around 112.30. Daily stochastics are still trending down and 4hr stochastics have crossed back down which means we could see more bearish movement for the pair. I’m still staying out of this pair at the moment but based on the technicals, we could see the pair drop back down to 112.00.

I’m not really big into fundamentals but I feel that they are important to discuss. In this section I will be posting fundamental tidbits that I find interesting from various sources. If you find an article that you think would benefit everyone, please email me (Big Pippin) with your username, the article, and a link to where members can read the entire article.

Now onto the Fundamentals:
  • Bernanke Sees Slower US Growth
    • Federal Reserve Chairman Ben Bernanke said Thursday that a host of economic problems, including the severe housing slump, will cause business growth to slow noticeably in coming months. Bernanke told Congress’ Joint Economic Committee that the central bank is watching developments closely, but gave no signal that it’s prepared at the current time to cut interest rates even further. He stressed that the central bank was keeping all options open, saying the Fed would be closely watching economic growth and the threat of inflation.
  • "Model Behavior"

    • Super Model Gisele Bundchen has decided that she wants to remain the world’s richest model by insisting that she be paid in almost any currency but the U.S. dollar! OK… Now the dollar has been officially dissed! Sure guys like Rogers, Buffett, Gross, Butler, Wiggin, and Bonner have dissed the dollar because of the fundamentals… But when a super model decides to side with us, well then we’ve got ourselves what I’ll call… "Model Behavior"!\
  • UK September retail sales saw the highest annual growth in 3 years:

    • The Office for National Statistics reported that retail sales in September rose 6.3 pct from a year ago, the highest rise since September 2004 and above analyst expectations for a 5.6 pct increase. In August sales rose 4.8 pct year-on-year, revised down from the earlier estimate of 4.9 pct.
News events to watch for tomorrow :
  • 8:30am EDT- US Trade Balance
    • The U.S. international trade gap narrowed noticeably in August to $57.6 billion from a revised $59.0 billion in July. The improvement was due to both a decline in imports and a rise in exports. Markets need to pick apart the details in this report and not just look at the headline number. Yes, we need to see continued export growth to support domestic manufacturing and with earlier declines in the dollar, we will likely get higher exports. But there will be interesting detail in imports. Much of the decline in imports in the last report was due to lower oil prices but also from dips in imports of consumer goods and motor vehicles. We will likely see a price induced rise in oil imports but it will be interesting to see whether businesses expect healthy consumer spending according to the strength or lack of strength in consumer related imports.
      • International trade balance Consensus Forecast for September 07: -$58.5 billion
        Range: -$60.5 billion to -$57.0 billion

  • 10:00am EDT- US Consumer Sentiment
    • The Reuters/University of Michigan’s consumer sentiment index fell to 80.9 in October from 83.4 in September. The index fell its sharpest since the aftermath of Hurricane Katrina two years ago. But consumer confidence indexes can be volatile, often showing major drops and major gains in sudden bursts. Current losses are concentrated in the most important sub-component, the assessment of future conditions which fell to 70.1. The assessment of current conditions is steady at a much firmer 97.6. Inflation expectations do show some pressure, no doubt tied to oil prices. Twelve-month inflation expectations are at 3.1 percent, up 1 tenth from mid-month but unchanged from September.
      • Consumer sentiment index Consensus Forecast for preliminary November 07: 80.0
        Range: 77.6 to 81.5

For a list of all of tomorrow’s news events, check out our Forex Calendar

  • dreknar

    I guess it will take one more than a day to see those pairs drop, bollinger bands seems too wide to indicate a near change and candlestick do not seems to have morning start…does someone see some other signals ?

  • dreknar

    I guess it will take one more than a day to see those pairs drop, bollinger bands seems too wide to indicate a near change and candlestick do not seems to have morning start…does someone see some other signals ?