Euro and Sterling Take a Break From Its Dollar Beatdown

EUR/USD

It looks like the Euro is finally taking a breather from its beatdown on the Dollar. After making a record high at 5450 on Friday, the pair has since eased back down to around 5365. Both 4hr and daily stochastics are now trending down and I think there is a good chance we'll see the pair continue to drop down to 5300.

GBP/USD

The Cable also seems to have eased up on its Dollar beatdown and has formed a resistance just above the 2.0200 mark. Both 4hr and daily stochastics are trending down with daily stochastics in overbought territory. I think there is a good chance we'll see the Cable drop down to 2.0100.

USD/CHF

The Swissy has shown unbelieve strength against the Buck for the past 2 weeks now. I think this week we'll start to see some recovery from the Dollar. At this point the 4hr and daily chart are giving mixed signals so I will hold off on trading the pair right now, but I am feeling bullish at the moment and will look to see if there are any good opportunities to go long throughout the week.

USD/JPY

The Dollar continued to fall against the Yen on Friday and today, but has now travelled up slightly to what seems may be a short term resistance at 102.00. Both 4hr and daily stochastics are trending down but daily stochastics are in oversold territory, so even though technicals indicate more bearish movement, it may be shortlived. I would look for the pair to drop down to around 101.50 right near its previous swing low. From there the pair could bounce back up or continue to drop to 101.00 so be careful!

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:

• Upward Inflation Pressures For the Euro
  • The euro rose to a record against the dollar after European Central Bank President Jean-Claude Trichet said there is ``strong upward pressure on inflation,'' signaling he's in no hurry to cut interest rates.
    • Source: Bloomberg
• Warren Buffett says we're essentially in a recession:
  • Source: CNN Money
• Dollar Falls to Record Low Against Euro
  • The U.S. currency has slid 4 percent against the euro in the past three weeks as the housing slump deepened and consumer confidence tumbled, leading traders to abandon bets the dollar and the economy would rebound as the Fed cut rates.
    • Source: Bloomberg
• Bernanke Signaling Rate Cut?
  • The Fed "will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks," Bernanke said, hewing closely to assurances he offered earlier this month.
  • ncoming barometers continue to "suggest sluggish economic activity in the near term," Bernanke told lawmakers. At the same time, he added, the Fed must keep a close eye on inflation given the recent run-up in energy and other prices paid by consumers and businesses. For now though, the No. 1 battle is shoring up the economy.
    • Source: Yahoo Finance
• New Home Sales Slip Near A 13 Year Low
  • New home sales slipped to a nearly 13-year low in January, according to a key government report on the battered housing market.
  • The reading was below the consensus forecast of 600,000, according to economists surveyed by Briefing.com, and was the lowest reading since the 559,000 rate reported in February 1995.
    • Source: CNN Money

News events to watch for tomorrow :

• 8:30am EDT- US Trade Balance

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

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