Trichet’s Big Mouth Leads To Another Big Day For The Euro

EUR/USD

The Euro continued to rise after a big fundamental day. ECB head, Trichet, said that there are more upward pressures on inflation which of course triggered the Euro to rally hard against the already weak Dollar. The pair made another record high at around 5377 and it could continue to move up. Both 4hr and daily stochastics are in overbought territory but they are both still trending up. I wouldn’t be surprised to see the Euro climb all the way up to 5400 before it takes a breather.

GBP/USD

The Cable also continued to rise against the paralyzed Buck and it sliced its way through 2.0000 like a hot knife on butter, moving all the way up to 2.0100. Both 4hr and daily stochastics are in overbought territory but are still trending up which leads me to believe that we may still see some bullish movement. However, on the daily chart, it looks like a bearish divergence is forming. Also, the Cable is facing strong resistance at both its 100 and 200 SMA on the daily chart. I would look for the pair to hang around 2.0100 but I have a strong feeling we’ll see the pair drop soon.

USD/CHF

Well the Swissy did end up falling like I said yesterday, and now the pair is trading just under 1.0300 at around 1.0290. Both 4hr and daily stochastics are in oversold territory and are trending up. If the Dollar can rise above 1.0300, I think there is a good chance we’ll see the pair continue up to 1.0350.

USD/JPY

The Dollar also fell against the Yen today as it dropped from 104.00 back down to 103.00. I’m still getting mixed signals as 4hr stochastics are trending up, while daily stochastics are trending up in oversold territory. If the pair breaks below 103.00 I would expect it to continue down to 102.50, which should then lead to another bounce back up to the upside.

 

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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.
  • 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.
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