Euro and Sterling rally hard versus the Buck

EUR/USD

Well we didn’t quite see the momentum towards the downside like I was hoping for yesterday. Instead the pair shot up and is now trading just under 4900 at around 4890. The daily chart is showing what looks like could be a bearish hidden divergence, and also happens to be in overbought territory. 4hr stochastics has also started to enter overbought territory. For the moment it looks like the bulls are in control, but I would watch for the pair to face resistance at 4900 and would watch for the pair to reverse either tonight or tomorrow.

GBP/USD

The Cable moved up higher like I thought it would yesterday. If you took my trade recommendation yesterday then you should have a nice profit now and think about exiting or taking partial profit. Right now, all signs still look bullish at least for the short term. Both 4hr and daily stochastics are still trending up and are just now entering overbought territory. I would look for the pair to continue up to at least 9800 if not higher.

USD/CHF

Yesterday I expressed my bearish sentiment on this pair but was still a little hesitant because of the 1.0850 support. Currently the pair has just seemed to break below this support level and I am feeling more confident that the pair will continue down to 1.0800. Both 4hr and daily stochastics are trending down which confirms my feelings.

USD/JPY

The USD/JPY continued to move quietly but ended up falling somewhat towards the end of the day. The pair seems to have picked up some downward momentum and I think we may have a chance to get in. The 4hr chart has completed its bearish hidden divergence formation which is a good sign for a drop and both 4hr and daily stochastics are trending down. I would watch for the pair to continue dropping to around 107.00 sometime tonight and tomorrow.

 

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:
  • Philly Fed Index Shows Big Slump

    • A key survey of manufacturing activity in the Philadelphia area found that conditions worsened this month and that the outlook for the sector is deteriorating.
    • The Federal Reserve Bank of Philadelphia’s Business Outlook Survey index fell to -24.0 from -20.9 in January, when the index reached it’s lowest point in six years.
  • Euro Interest Rates about to Rise?

    • And don’t look now, but Eurozone inflation is rising… Of course I told you it would, given oil prices, and that the European Central Bank (ECB) would have to drag its feet to cut interest rates… (I also tried to say that on CNBC, right?) Anyway, inflation for the 13-nations that make up the euro, rose 3.1% in November… Whoa Nellie! That’s way too high, given the ECB’s ceiling of 2%!
    • The one thing to think about here is that should the ECB decide to raise rates, and the Fed decides to keep cutting rates (recall the discussion about the possibility of 50 BPS this month from the Fed) The euro would be enjoying a positive rate differential… You think the euro was popular as an offset currency to the dollar before? Wait till that happens (if it does of course!)
  • Fed Looks to End Credit Crunch
    • The Fed and other global central banks announce a new auction designed to let beleaguered financial institutions access more cash.
    • In essence, the Fed is giving beleaguered banks the opportunity to access funds it might need for year’s end without having to borrow money directly from the Fed at the discount rate of 4.75 percent.
    • The Fed added that it was coordinating with the Bank of Canada, European Central Bank, Bank of England and Swiss National Bank on the auction process in order to "address elevated pressures in short-term funding markets."
News events to watch for tomorrow :

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

  • kc3030

    I think you posted your analysis a little bit too early today. Alot has already happened since you posted. The euro has finally had new historical highs. Lets see how long it last.

  • kc3030

    I think you posted your analysis a little bit too early today. Alot has already happened since you posted. The euro has finally had new historical highs. Lets see how long it last.