Dollar takes a hit over Thanksgiving, but shows starts to show some life!

EUR/USD

Over the Thanksgiving holiday, the Euro soared up over the 1.4950 mark, nearly reaching 1.5000. While the rally wasn’t as strong as last year’s Thanksgiving fiasco, the pair did manage to gain some momentum. However, the rally did not last long and since eclipsing the 1.4950 mark, the Euro has now dropped back to around 1.4850. 4hr stochastics are trending up so we could see the pair rise back up to 1.4900. On the daily chart there is a bearish divergence with stochastics trending down in overbought territory. This could be an indication of a drop in the medium term. If the pair breaks below 1.4800, I would expect it to continue down to 1.4700.

GBP/USD

The Cable also rallied slightly over the Thanksgiving holiday but it definitely was not as powerful as last year. Since rallying up to 2.0750 the pair has dropped down to 2.0550 and then rallied back up to around 2.0700. So you can see that right now we’re seeing a bit of choppiness, and if you look at the 4hr chart, you’ll notice that all 3 moving averages are flat at the moment. The only reason I am slightly bullish is because both 4hr and daily stochastics are trending up. I’d like to wait and see some confirmation before going long so I’m going to see if the pair can break past its 100 SMA around 2.0715 before entering. If the pair can break that resistance point, I would look for it to rise to at least 2.0750 or even 2.0800.

USD/CHF

Like the Euro and Sterling, the Swissy also pushed the Dollar lower, moving down to 1.0900 over the break. However, the pair shot up sharply since then and is now trading just above 1.1000. 4hr stochastics are trending down while daily stochastics are trending up in oversold territory. I’m going to hold off for the moment since I am getting mixed signals. However, I think in the medium term we will see this pair rise up to 1.1100. We’ve seen a sharp drop over the last month, so we could see some retracement soon.

USD/JPY

The Dollar has been struggling across the board, and the Yen has been no exception. The pair reached as low as 107.50 before the Dollar managed to get up to just above 108.00. Like the Swissy, I am getting mixed signals on this pair as 4hr stochastics are trending down while daily stochastics are trending up. I will hold off on this pair as well, but judging by the daily chart, it looks like we may see a bounce up to 109.00 some time this week.

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:
  • Fed Forecasts Slower Growth and More Out of Work Next Year
    • The housing collapse and credit crisis will slow economic growth and nudge up unemployment next year, the Federal Reserve said Tuesday in a first-of-its-kind forecast that some economists believe will lead to interest rate cuts early in 2008.
  • 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"!\
News events to watch for tomorrow :
  • 10:00am EDT- US Consumer Confidence

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