The greenback had a tough trading session last week, which was capped off by a huge bearish slip on Friday…. … Sparked by a batch of mediocre US data and positive EUR news, the USD saw losses throughout the week that saw a return to exchange rates it had during the height of the credit crisis, only several months ago.

The oft traded EUR/USD pair was one of the more effected trading pairs of the week, as it saw
fluctuation in the early parts of the week, dipping as low as 1.5360, before
skyrocketing back to levels of 1.57 and above. The early part of the week saw decent
fundamental news from the US, as ISM manufacturing, ADP NonFarm Employment Change
and Unemployment Claims all showed improvement. Thursday's unemployment claims were
released at the same time as a press conference for the European Central Bank (ECB),
which was where any hope of more dollar bullishness ended. The routinely hawkish
President of the ECB Jean-Claude Trichet made market-moving news as he announced the
likelihood of an unprecedented rate hike in the Euro-Zone (EZ) by July. Investors
were privy to a bullish run on the EUR/USD that moved nearly 200 pips before the end
of trading on Thursday.

Friday was equally important for the market as the release of NonFarm Payrolls and
the US unemployment rate sent the market into what was an expected frenzy. NonFarm
numbers came back at -49K, a more positive release then expected, still though it
was the 5th straight month that we have seen the all important figure see negative
results. The Unemployment rate provided the surprise of the day as it ballooned to
5.5%, its highest mark since late in 2004. The 0.5% hike brought immediate losses
to the greenback against a majority of its currency rivals. As the day progressed,
more details of the unemployment situation were felt throughout the US. With the
bearishness of the USD came the rise of Crude Oil prices as the important commodity
shot back up to record high rates of over $138 per barrel. Equally as important was
a nearly 400-point drop in US stock markets.

Looking ahead to this week, we will see a batch of US data headlined by Michigan
Consumer Sentiment, Core CPI, Retail Sales and the US Fed President Trade Balance.
The fundamental forecast has the aforementioned making slight gains, except for
Trade Balance. Still though it is hard to see how the US will manage to climb out of
the current state of affairs, as rising commodities prices and investor wariness
surrounding the USD will likely stunt any positive calendar news. Also expected next
week are two important speeches by Federal Reserve Chairman Ben Bernanke. The Fed
boss is under some scrutiny from US officials regarding the decrepit state of the US
economy, and will likely address the current situation, hopefully with a feasible
solution. Still though expect high volatility in and around the time of his
comments.

Today, the US has a light news day as we expected Pending Home Sales and comments
from New York Fed President Geithner. With a batch of outside data and another
speech by ECB President Trichet, expect the greenback to continue its bearish trend.

* EUR
The Euro spent last week, posting steady gains against a majority of its currency
rivals. A combination of mixed US and GBP news and the ECB Press Conference proved
enough to bring solid results to the world second most liquid currency. The EUR saw
most of its bullishness immediately following and ECB Press Conference where
President Trichet labeled his growing concern over inflationary risks by hinting at
a July rate hike in the EZ. The sudden change in policy by the staunch ECB sparked
bullish EUR positions by investors throughout the market. Trichet warned that the
move is still not ideal, but because of the strength of the EUR and the lack of
similar growth in the EZ economy, the rate hike looks more and more likely.

On Friday, the EUR saw positive gains amidst poor local economic data. German
Industrial Production dropped unexpectedly by just under 1%, as a result of rising
material costs in April.

The current state of the US economy and the fears surrounding rising food and oil
prices have also helped cement the growth of the 15-Nation currency. The correlation
between EUR/USD and Crude Oil is dangerously close to 100%. The EUR/USD should
prove to be interesting pair for Forex investors this week, as many believe it will
test levels of 1.60 yet again.

There is a host of European data on tap this week, but little that should really
make a lot of noise in the market. A speech by ECB President Trichet today and
Industrial Production data from Italy and France could contribute to some EUR
bullishness.

* JPY
The JPY saw significant recovery on Friday after a week of bearishness versus most
of its currency rivals. The JPY was absent from the news docket for most of last
week. Average Cash Earnings, Monetary Base and a speech by new Bank of Japan (BoJ)
Governor Shirikawa, did little to move the Asian currency. In fact, there is very
little to come out of Japan regarding local economy that has moved the currency
lately.

Friday provided strong bullish movement for the JPY as traders renewed reacted to a
drop in the Dow Jones and the Standard and Poor's index to renew the buying of the
low interest JPY. The renewal of carry trading came also as world commodities prices
rose for yet another week.

On tap this week from Japan we can expect quite a lot of important economic data.
Machinery and Industrial indices, Overnight Call Rate, the BoJ Monthly report and
Press Conference and GDP could provide some volatility to the JPY. However it is
still recommended to watch global news and Stock movement to really gauge the
direction of the JPY

Technical News
* EUR/USD
The 4 hour chart is showing that there has been a breach through the very strong
resistance level of 1.5790. This breach might indicate the continuation of the
strong bullish trend to the next target price of 1.5850. Going long appears to be
preferable.

* GBP/USD
The range trading within the bearish channel of the daily chart continues. The cable
is now showing local bullish movement in the channel and it appears that a test of
the upper level is quite imminent. Going long with tight stops might be a good
strategy today.

* USD/JPY
The pair has tested the bottom barrier of the daily bullish channel unsuccessfully.
The daily oscillators are showing that the bullish momentum is back and that the
next target price might be 106.00. The 4 hour RSI is supporting the bullish notion
and it appears that going long might be the best choice today.

* USD/CHF
The daily chart is slowly showing that the bearish trend is moderately back after a
long period of range trading without a distinct price direction. The 4 hour Slow
Stochastic is showing a double top formation with negative slope which indicate that
the bearish momentum might increase. Going short might be a preferable strategy
today.

The Wild Card
* WILD – Crude Oil
With fresh all time high being breached on a daily basis, it appears that Oil is
showing no signs of a stop. The momentum is very high and the price movement
transcends all normal technical logics.
Forex traders have great opportunity to join the bullish bonanza while the momentum
is higher than ever.

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