Guess Who’s Back??

EUR/USD

The Euro has been making some nice gains since Feb. 7th and the medium term charts indicate more of this bullish movement. Stochastics on the daily chart are trending up nicely and it looks as though the pair may continue to head up to 1.4800 some time this week. However, in the short term, 4hr stochastics are in overbought territory which means we could see some retracement to the downside first. Right now I’m going to hold off on trading the pair until I see more definitive signals.

GBP/USD

The Cable looks about as confused as a cow on astroturf. On both the 4hr and daily stochastics we can see that they both managed to break above oversold territory, but have since taken a U-turn and appear to be headed back down. This pair is kind of tricky right now as both the US and UK economic data has been cruddy as of late. I don’t really have a bullish or bearish bias and I am going to hold off until I see something exciting. Yawn!!

USD/CHF

The Dollar has been doing some wobbling against the Swissy as well and after today’s drop we may see the pair continue its rangebound "trend" and move back up sometime in the near future. However, at the moment both 4hr and daily stochastics are both trending down which gives me some belief that the pair will continue from its current position at around 1.0930 and move down to its 1.0900 support area. This is a short term play and I would watch for any sudden movements to the upside as an indication to GET OUT!

USD/JPY

Well the Dollar has also to play see-saw with the Yen as well as it has been moving right around the 108.00 mark for a few days now. On the 4hr chart, all 3 moving averages are starting to converge together which is a sign of rangebound movements. We can also see that on the daily stochastics, it has not been a smooth ride either although the pair has been moving up slightly. Right now 4hr stochastics have hooked up while daily stochastics are trending down. This is yet another indication of rangebound movements and it is much safer to stay out of these conditions and wait until something clearer opens up for us.

 

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:
  • 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 :
  • 4:30am EDT- MPC Meeting Minutes
  • 8:30am EDTUS CPI
  • 2:00pm EDT– FOMC Meeting Minutes

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