The Greenback Shows Signs of Life

EUR/USD

Well the Euro rose up slightly to its upper range at its 100 SMA on the 4hr chart (1.4750), but then proceeded to bounce down to its lower range at its 200 SMA on the 4hr chart (1.4650). Since then, the price has moved right back up to the middle of the range at right around 1.4703. 4hr stochastics are trending down while daily stochastics are trending up. You can see that right now we’re getting many indications that the pair is rangebound at the moment. I would look for the Euro to drop down to its 200 SMA on the 4hr chart at around 1.4650 followed by another bounce back up towards its 100 SMA on the 4hr chart at around 1.4750.

GBP/USD

The Cable moved exactly like I thought it would today. We saw it rise up to 2.0500 and then take a sharp fall to 2.0400. The bearish hidden divergence really helped out on this move and now that 4hr stochastics are trending down, it looks like the pair may continue on down to 2.0300. The Cable does face slight resistance at around 2.0365 which is where its 50 EMA is on the daily chart but it looks like the momentum is in the Dollar’s favor at this point.

USD/CHF

The Swissy actually broke out of what looked like would be a range as it broke through 1300 and moved to 1350. However, since then, the pair has cooled off and is now trading around 1325. There is a slight bearish divergence on the 4hr chart which indicates a short term drop. In addition, daily stochastics have crossed down in overbought territory. I would look for the pair to drop down to wherever the 50 EMA and 200 SMA meet on the 4hr chart (around 1270).

USD/JPY

The Dollar has been rising against the Yen the past few days, but it looks like we may see another major drop. On the daily chart we are seeing a nice bearish hidden divergence. 4hr stochastics also happens to be trending down (albeit only slightly). I would look for the Dollar to hit resistance at its 50 EMA on the daily chart at around 112.35 followed by a sharp drop from there.

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:
  • Fed Forecasts Slower Growth and More Out of Work Next Year
    • The housing collapse and credit crisis will slow economic growth and nudge up unemployment next year, the Federal Reserve said Tuesday in a first-of-its-kind forecast that some economists believe will lead to interest rate cuts early in 2008.
  • Bernanke Sees Slower US Growth
    • Federal Reserve Chairman Ben Bernanke said Thursday that a host of economic problems, including the severe housing slump, will cause business growth to slow noticeably in coming months. Bernanke told Congress’ Joint Economic Committee that the central bank is watching developments closely, but gave no signal that it’s prepared at the current time to cut interest rates even further. He stressed that the central bank was keeping all options open, saying the Fed would be closely watching economic growth and the threat of inflation.
  • "Model Behavior"
    • Super Model Gisele Bundchen has decided that she wants to remain the world’s richest model by insisting that she be paid in almost any currency but the U.S. dollar! OK… Now the dollar has been officially dissed! Sure guys like Rogers, Buffett, Gross, Butler, Wiggin, and Bonner have dissed the dollar because of the fundamentals… But when a super model decides to side with us, well then we’ve got ourselves what I’ll call… "Model Behavior"!\
News events to watch for tomorrow :

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