Yesterday the greenback had a volatile trading session against its major currency rivals. It underwent contrasting trends vs. the EUR… … and the GBP and was bullish vs. the JPY.

The main news from the US economy revolved around the Consumer Price
Indices. The Consumer Price Index was released at 0.2%, a little bit lower than last
month's 0.3% mark. The Core Consumer Price Index was also slightly lower than last
month's 0.2% mark as it came in at 0.1% for April. The biggest repercussion from the
reports is that the Fed can now cut rates once again if needed, rather than worry
about rising inflationary trends. This very understanding might be what reversed the
USD bullish trend into a bearish one.

Today, an extremely intensive news day can be expected for the US economy. First off
on the day will be the Empire State Business Conditions Index. The index measures
the general business conditions of manufacturers in New York State. Although the
survey is limited to New York only, it's highly important as the New York Federal
Reserve report serves as a precursor for national manufacturing numbers. Later on,
the Treasury International Capital (TIC) Net Long-Term Transactions will be
published. Analysts forecast it to release at 63.6B, well below last month's 72.5B
mark. Such a descent should have negative effect on the USD. At 13:30 (GMT) Fed
Chairman Bernanke will deliver a speech in Chicago on Risk Management in Banking
Organizations. As always, Bernanke's speeches are very intriguing, as clues
regarding interest rate changes might be scattered throughout. Considering that
analysts predict an interest rate cut to be imminent, this particular speech could
be vital. At 14:00 (GMT) The Philadelphia Fed Manufacturing Index will be published.
Just like the New York Index, its importance derives from the fact that it's
released weeks before other major reports on manufacturing.

Today will be a fascinating day for traders, yet it obligates them to stay fully
alert. For today, trading the USD could create significant profits as high
volatility is expected throughout most of the day.

* EUR
Yesterday the EUR saw volatile trends within its major pairs. The EURUSD began the
day with a falling trend as it hit a daily low of 1.5413, yet it promptly rose up to
1.5473. The only significant gain for the EUR came against the JPY.
European news from yesterday included the French Consumer Price Index. This Index
which measures the rate of inflation came out at 0.3%, lower than last month's 0.8%
figure. Later on in the day, the European Industrial Production report was
published, and released at -0.2%, better than the expected -0.3% mark, yet lower
than last month's 0.3%. Also yesterday, the Council of Economics and Finances
Ministers held a meeting, where all of the Euro-Zone financial chiefs expressed
concerns over the growing levels of inflation, yet they admitted their appreciation
to the European Central Bank (ECB) reactions to the rising commodities prices, and
stated they have full confidence that it will continue to act this way.

As for today, a bundle of data is expected for the EUR. The German, French and
European Gross Domestic Product (GDP) reports are scheduled. These reports measure
the total value of all goods and services produced by an economy. Analysts forecast
positive results in all three reports, and rising trends are likely in light of
these forecasts, as GDP is the primary gauge of an economy's health. Later on, the
ECB President Jean Claude Trichet will deliver a speech. Trichet has avoided
manipulating the European interest rate for the last month, despite rising
commodities prices. Investors will follow his speech very closely, in the event that
he gives any clues regarding a rate change, as it should instantly affect the EUR.

Traders should remain very keen today, as high volatility is expected. Lots of data
coming from the Euro zone and the U.S should create fluctuation in the market.
Traders should use this opportunity to create short-term profits.

* JPY
Yesterday was an extremely bearish day for the JPY as it saw falling trends against
most of its major counterparts. It has continued it's freefall since the beginning
of the week vs. the USD, the EUR and the GBP.
The only news regarding the JPY that came out yesterday was Core Machinery Orders,
which reflected an 8.3% fall in March, making the value of orders in March the
smallest since May 2005. It is the second straight monthly fall following a 12.3%
decline in February, and for now it seems that the JPY is continuing to nurture its
deterioration.
On tap for today, the Japanese Gross Domestic Product is scheduled. This survey
measures the total value of all goods and services produced by the economy. Analysts
forecast it to come in lower than last month, and such unfavorable results will
probably continue to contribute to the JPY downfall.

Traders should bear in mind that the Gross Domestic Product results will be
published only at 23:50 (GMT). Hence until then the JPY will be mostly influenced by
global economic developments, especially from the U.S. This day is promising to be a
very volatile day for the Forex market, and the JPY shouldn't be any different.

Technical News

* EUR/USD
The pair's bullish move is approaching the testing point of 1.5500 which is a key
Fibonacci level of the entire bearish corrective move. The momentum is quite bullish
and if a breach through the key level occurs, we might see the pair generate fresh
momentum with a target price of 1.5580.

* GBP/USD
There is a very distinct flag forming on the 4 hour chart, as the cable now
approaches the upper level close to the tip of the flag. The local momentum within
the flag is moderately bullish yet a very strong cross is imminent on the daily
chart, which indicates that the bearish move might return shortly with strong steam.

* USD/JPY
The pair is in the midst of the fifth consecutive day of appreciation and according
to the daily chart there is still much more room to run. The hourlies are supporting
the bullish notion, and it appears that going long might be the preferable strategy
today.

* USD/CHF
The pair has been ranging for a while now after the strong bullish move, and it
appears that today the local momentum might be moderately bearish. Although the
signal is not strong the pair might have a local target at 1.0450, which might make
it feasible for forex traders to go short with very tight stops.

The Wild Card
* Gold
The flag formation on the daily chart still remains intact, as gold now floats in
the middle of it with moderate bullish momentum. The upcoming cross on the daily
Slow Stochastic is showing that the bearish trend will probably resume quite
shortly. This could be a great opportunity for
forex forex traders the take a position before the technical signal is fully
unraveled.

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