On Wednesday the greenback saw gains against its major counterparts, amidst negative world economic data. The greenback was not able… … to hold on to such gains as early morning trading on Thursday from Asia, saw the dollar once again slip against the Euro and the Yen.

The release of weak German industrial data along with equally poor retail numbers
from the euro-zone state, sparked investors to push the EUR/USD back under 1.47,
dropping as low as 1.4640 during Wednesday's trading. With continued speculation
over Fed interest rate cuts, the dollar was not able to sustain its momentum as it
once again crept toward 1.47 against it European rival.

Two economic events were released from the US on yesterday's calendar, as St. Louis
Fed President William Poole gave a speech at the Financial Planning Association of
Missouri, in St. Louis. Poole was adamant that the investors should not take the US
financial market problems and assume they will bring a recession. He went on to add
that “2008 looks to be a year of rising growth,” as he looked to make positive light
of the greenback gains during yesterday's trading. The release of Housing Starts did
little to change trading behavior yesterday, as investors expected very little to
begin with.

Today is a day largely dominated by European economic events with a host of
important data to be released. The US will release Unemployment Claims today, at
13:30 GMT, followed by a speech at 1800 GMT by Fed Chairman Ben Bernanke. Bernanke
will give a speech titled “Financial Markets, the Economic Outlook, and Monetary
Policy” which should clarify a great deal regarding interest rate speculation. The
dollar will most likely move in the direction that the European economic takes it.
Another day of poor European economic data should spur gains in the dollar.

* EUR
Europe was taken a bit off guard yesterday by a string of negative data from Germany
and France as the EUR suffered some losses against the dollar. German industrial
production numbers came back 1.2% below initial forecasts at -0.9%. German retail
sales, which were expecting a 3.5% increase, only managed 1% as the December figure
came in at -1.3%. French Trade Balance was released with an unexpected 1.2 Billion
decrease to bring its total to -4.8 Billion. This data sparked a quick increase in
dollar confidence, as investors questioned how much longer the ECB could keep up its
hawkish stance on European monetary policy.

Today's economic calendar is posted with several important economic events form
Europe. At 7:45 GMT the release of French industrial production and government
budget balance is expected as industrial numbers are slated for a 2.5% decrease. The
day will continue with several UK events followed by the Sterling and Euro Interest
Rate Statements at 12 and 12:45 GMT, respectively. To finish up, ECB President
Jean-Claude Trichet will hold a press conference in Frankfurt following the
Governing Council's interest rate announcement. Expect high volatility as the
Interest Rate press conference normally delivers a clear message of EU monetary
policy.

* JPY
The JPY traded with gains on 15 of the 16 major currencies yesterday, amidst
disappointing results from the Nikkei. Investors were inclined to cut holdings in
high-yielding assets that were directly being funded by Japanese loans. As Japanese
stocks continue to weaken speculation over the effect on the JPY is still unclear.

Carry trades resumed heavy volume as well yesterday, as the Dow Jones Industrial
average showed significant gains as it rose by 148 points. Resumption of carry
trades came during a very volatile point in the market day which magnified the JPY
gains in the Forex market.

The Japanese economic calendar posts no significant events today as the main focus
regarding the JPY will be the movement in the Nikkei and Dow Jones.

Technical News
* EUR/USD
The pair has been floating in a relatively tight range for several days and now
shows some moderate bullish sentiment. There is a bearish channel forming on the 4
hour chart with a top barrier of 1.4705. A breach over that level will validate the
next bullish move to 1.4800.

* GBP/USD
Yesterday's bearish momentum continues to build up as the pair reached the level of
1.9550. It looks as if there isn't any bullish sentiment to indicate even the
slightest corrective move, and the bearish steam appears to be blowing at full
strength. It appears that going short still looks like the right choice today.

* USD/JPY
The daily chart indicates that the next key level for the bullish correction move is
110.20 which are the 23.6% Fibonacci level of the 117.90/107.85 move. The will most
likely test it soon, and if the breach will occur we should see the pair correcting
further, possibly back to the 111.00/112.00 zone.

* USD/CHF
The slow stochastic and the RSI on the 4 hour chart indicate that the local
correction move still has some steam in it, as both figures float at around the 50
level. The daily chart supports the bullish notion with a slightly more moderate
signal. It is advised to hold the entry for a stronger signal, as the sentiment is
quite vague and a stronger one will surely appear soon.

The Wild Card
* Gold
There is a very distinct and sharp bullish channel on the 4 hour chart as Gold now
floats at the bottom level of it. Its inability to breach the level indicates that
the very strong bullish momentum is not over yet. This could be a great opportunity
for Forex traders to go long at a bottom price and enjoy the high profit potential from
the technical pattern.

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