Yesterday, the greenback lost ground on what had been a bullish closing to last week's trading. The US was absent… … from the day's economic calendar, which pushed the Dollar to record lows against the Euro in particular.

The greenback has struggled to make a steady recovery against its major currency rivals, as bullish trends have
proven to be short lived lately. With so many contributing factors to the fate of
the dollar and the overall importance it has on the global economy, many investors
still believe the greenback has the ability to recover, even with the current state
of affairs.

Last week's unemployment numbers were better than expected along with the Empire
State Business Conditions Index, and events for the week to come could contribute to
the greenback.
Yesterday, EUR/USD prices soared towards the 1.6000 level. A contributing factor in
the rise of the major pair were stock market losses brought about by Bank of America
reporting a sharp drop in their income. The bank, currently the second largest in
the US reported quarterly losses that sent US stocks to their first losses in 5
days.

Today, we should expect a much more volatile market due to US news events on tap. At
14:00 GMT we expect the Richmond Fed Index, quarterly House Price Index and the Fed
TAF auction summary, these will be headlined by the release of Existing Home Sales.
The figure is forecasted to fall roughly 1.5% from last month's number and will show
that Existing Home Sales slipped to $4.90M. Last month's number of $5.03M broke a
six-month spell of declining sales, while annual figures from last year still trump
this year's figure by just under 25%. Barring a positive surprise in these results
expect to see even more dollar bearishness that could push the EUR/USD to record
highs beyond 1.60.

* EUR
The Euro recovered nicely yesterday, mainly against the dollar, even under some
uncertainty regarding the future of the Euro-Zone economies. The Euro-Zone was
relatively quiet yesterday as the only significant event was a speech by European
Central Bank (ECB) President Jean-Claude Trichet. Trichet, while speaking at the
“ECB/European Commission conference on post-trading arrangements in Europe”,
noted in part, the necessity for full transparency by financial entities during this
very tumultuous period in the global economy. These remarks were even more
significant due to the recent questions regarding the true outlook of the Euro-Zone
economy. There are many investors who believe that the slow-down in economic growth
in the EU coupled with the rising price of the Euro puts the ECB in the precarious
position of having to manipulate changes. Trichet, who has been hawkish regarding
most monetary policies, could be forced to tweak interest rates in the near future
to combat inflationary trends.
The recent rise in the London Inter-Bank Offered Rate (LIBOR) could prove to be
detrimental for companies who borrowed heavily in the recent past, many of which
were European. The slowdown in consumer spending in the Euro-Zone also lends to the
assumption that economy does have some hurdles overcome.

Today there are no scheduled EZ economic events, as we look ahead to a full day of
data on Wednesday. With the heavily traded EUR/USD pair approaching record highs,
investors should keep there eyes peeled to Existing Home Sales from the US to
determine the direction of the pair. Negative data could likely send the EUR/USD on
a bullish run.

* JPY

Yesterday, the JPY gained against a slew of major currency rivals as carry trading
stalled off of Asian stock market losses. The unwinding in carry trades brought
about the first rise in a week against the Euro, and did well against all of its
dollar rivals.

The fall in US stock prices gave way to similar movement in the Asian Markets as
losses were felt. An empty economic calendar put equal focus on risk appetite with
carry trading slowing down.

Today, the JPY is expecting the 23:30 GMT Trade Balance report. Forecasts have the
figure gaining 0.29 Trillion Yen, but should not have very much effect on JPY
trading. Expect the JPY to react to US stock prices as well as the release of
Existing Home Sales. It is likely will continue to see JPY bullishness.

Technical News
* EUR/USD
After a failed attempt to test an additional all time high, the pair is showing its
first signs of a correction. There is a bearish cross forming on the 4 hour Slow
Stochastic, as the RSI confirms with a static float at the 50 level. It appears that
going short might be preferable today.

* GBP/USD
After the bullish breach through the daily channel accumulated its momentum, the
cable has returned to its bearish trend. The daily chart is showing a very strong
bearish cross, and the 4 hour chart is slowly joining the bearish notion. Going
short seems to be the right way today.

* USD/JPY
There is a very distinct channel forming on the daily chart, as the pair now slowly
drops to the middle of it. The momentum is quite bearish at the hourly level, and is
entering neutral territory at the daily level. Going short with tight stops might be
a good choice today.

* USD/CHF
The pair continues to float without a distinct direction yet with extremely choppy
sessions, and violent price movements. The daily chart is showing no bias to any
direction, and the hourlies are moderately bearish. Traders could stay out of this
one today, or go short with very tight stops

The Wild Card
* Crude Oil
The bullish bonanza continues with no close signs of a halt. Oil is constantly
breaching record highs, and all oscillators are showing the continuation of the
bullish trend. Sharp drops can be seen locally, so
forex traders might look for a dip and attempt to rejoin the very strong bullish
trend.

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