Markets stay relatively quiet. Dollar looks poised to rise against the Euro and Yen

EUR/USD

Well the Euro was pretty much a bore today as it simply hovered around 4700. The daily stochastics are now trending down in overbought territory which increases my confidence in the fact that the pair will fall. However, in the short term, 4hr stochastics are still trending up which means I’m not going short just yet. True we can’t time everything perfectly, but I would wait a little while longer and see if the pair makes a push up to around 4750. From there I would look to go short and look to target 4700 and then maybe its 50 EMA on the 4hr chart which is currently around 4665.

GBP/USD

The Sterling rose slightly today like said yesterday but faced resistance at around the 9800 mark. 4hr stochastics, which were trending up earlier, now have crossed down after a sudden drop. Daily stochastics are trending up in oversold territory. So what’s to make of all this confusion? Well…nothing at this point. I do think we’ll see the Cable rise in the medium term, but for now 4hr stochastics are a bit shaky and I would hold off on trading this pair at the moment.

USD/CHF

The Dollar did end up bouncing back down to 1.1150 but the Swissy looks like it may be at a stand still for now. 4hr stochastics are trending down nicely while in contrast, the daily stochastics are trending up in oversold territory. I’m thinking we’re about to see a range between 1.1100 and 1.1200. In the short term, I would look for the pair to drop down to 1.1100 which should lead to another bounce back up towards 1.1200.

USD/JPY

The Dollar rose for a 2nd straight day against the Yen today, pushing through 109.00 and ending up right around 109.50. At this point daily stochastics are trending up in oversold territory which leads me to believe that we’ll see a rise (retracement) for the Dollar in the medium to long term. 4hr stochastics are currently crossed down which means we could see a choppy up and down movement as the pair continues to rise. I am holding off on the pair right now and will wait until things look a little smoother.

 

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 :
  • None

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