Euro makes yet another record high against the Dollar

EUR/USD

Well the Euro started to fall early today, but because of slowing US productivity and a rise in labor costs, the pair Dollar just didn’t have any fundamental backing to cause the Euro to fall any further. Since then, the pair rose all the way back up to its previous record high at around 5275 and seems to be playing around that level. The technicals have also reversed in favor of the Euro which makes me second guess my bearish feelings. For now, I would hold off as fundamentals are simply outweighing the technicals at this point.

GBP/USD

The Cable did end up falling about 100 pips like I thought it would, but like the EUR/USD, the Dollar didn’t have enough fundamental juice to keep the momentum going in its favor and the Sterling took over in the US session and pushed the pair back up to around 9950. Right now momentum looks like it is in the Sterling’s favor, and if there is a good break of the 9950 level, then there is a good chance we’ll see the pair run back up to 2.0000.

USD/CHF

After falling hard last week, the Swissy seems to be back in range mode as it keeps moving up to 1.0400 and then falling back down. Right now, it is in the process of falling back down from 1.0400 and it looks like we could see it drop back down to 1.0300 before it bounces back up.

USD/JPY

The Dollar did end up falling to right around 102.60 like I thought it might but then it had a nice rally back up to 104.00. 4hr stochastics are crossing back down in overbought territory while daily stochastics are trending up in oversold territory. I would hold off on the pair for now since I’m getting mixed signals and see what happens in the next day or so before making a move.

 

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:
  • Warren Buffett says we’re essentially in a recession:

  • 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.
  • 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.

  • 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.
  • 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!)
News events to watch for tomorrow :
  • 3:00am EDT- GBP Halifax House Price Index
  • 7:00am EDT- BOE Interest Rate Statement
  • 7:45am EDT- ECB Interest Rate Statement
  • 8:30am EDT– ECB President Trichet Speaks
  • 8:30am EDT- US Unemployment Claims
  • 10:00am EDTUS Pending Home Sales

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