The greenback continued to fall sharply yesterday on the back of more negative U.S economic data which further fuelled speculation… … of an aggressive Fed rate cut in March.

The greenback fell to a new all time low against the EUR after U.S Consumer
Confidence released well below expectations at 75.0 for the month of February, which
is a 17 year low for this figure. There was some positive U.S data released
yesterday as the PPI figure surprised on the upside, releasing at 1.0% which was
well above the forecasted figure of 0.4%. However this positive data was negated by
comments from
Fed Vice Chairman Donald Kohn saying that risks to U.S. economic growth are of
greater concern to the central bank than inflation. The greenback is likely to
remain firmly rooted in grizzly bear territory in the near term as given the risks
to the U.S economy the Fed will be forced to keep cutting rates and ignore rising
inflation. Another key factor that drove the greenback to an all time low against
the EUR yesterday was the fact that positive Euro-zone data is continuing to make a
rate cut by the ECB highly unlikely, while a Fed rate cut is now almost certain.

Looking ahead, it does not seem as though the greenback will receive any reprieve
today as we expect the Durable Goods and New Home Sales figures. These figures are
forecasted to come in lower than last month and with the U.S economy in tatters
there is a high likelihood that these figures will disappoint beyond market
expectations. Also Fed Chairman Bernanke will speak before the House Financial
Services Committee and he is likely to reiterate Vice Chairman Kohn's comments that
U.S growth is of prime concern to the Fed. However many analysts are now of the
opinion that since the greenback has crossed the key 1.5000 level against the EUR,
it could consolidate before once again being pulled back by the bears. So traders
can expect the bears to remain firmly on top in the near term and the greenback will
only manage a sustained recovery once all the Fed rate cuts are firmly behind us and
there is a steady stream of positive U.S economic data.

* EUR
The EUR appreciated sharply against the greenback yesterday, reaching a new all time
high and breaching the key 1.5000 level. There was positive news for the Euro-zone
yesterday as the German Ifo Business Climate Index, which measures the mood of firms
in manufacturing, construction, wholesale and retail, surprised on the upside
releasing well above the forecasts at 140.1 up from its previous 103 mark. This news
coupled with weak U.S data was the main driver of the EUR's sharp rally against the
greenback yesterday. The reason for this is because the stronger-than-expected Ifo
survey and high crude oil prices reduce expectations that the European Central Bank
will cut rates to deal with a slowdown of growth in the Euro-zone.

Looking ahead to today, we expect the German Consumer Confidence figure, German
Import Price Index and the Euro-zone M3 Money Supply. These figures are unlikely to
cause any volatility and any sharp EUR movement today will be dollar centric. The
EUR will maintain its bullish rampage against the greenback for as long as the
interest rate differential between the Euro-zone and the U.S continues to widen. If
U.S data once again disappoints today, then the EUR will target another new high
against the fragile U.S currency.

* JPY
The JPY was one of the few currencies that failed to gain ground against the
freefalling greenback yesterday. The JPY range traded against the USD yesterday as
the euro-dollar pair grabbed center stage on the trading arena as a result of key
U.S and Euro-zone data releases. The JPY may find itself losing more ground versus
the greenback despite the fact that the USD has been weakening all across the board.
The main reason for this is the fact that the continuing rate cuts by the Fed have
reduced global liquidity level concerns and therefore investors may now prefer to
place their funds in countries where the yield is high. So we may see carry trades
back in action in the near term despite the fact that slowing global economic growth
is driving risk aversion.

Technical News
* EUR/USD
The pair has breached the much anticipated 1.50 key level and is now traded at all
time high levels around 1.5040. The bullish move was validated and the momentum is
now very strong. It appears that the pair is going towards the 1.5090 on the
immediate level, and that going long should be a preferable choice today.

* GBP/USD
The bullish trend is very strong as the cable is carried up on the back of the USD
weakness. There is a bearish cross forming on the 4 hour chart, yet with a strong
bullish momentum on the daily chart it might be a good choice to buy on dips, as the
local correction move unfolds.

* USD/JPY
The pair is shaping into a bearish formation within the flat channel. The slow
stochastic on the daily chart indicates that the momentum is relatively strong, and
the RSI supports the bearish notion. Next target price might be around 106.50, and
if breached we should see a stronger bearish move being validated.

* USD/CHF
The key level of 1.0700 was breached yesterday, after three failed attempts on the
daily chart. The bearish move is validated on the 4 hour chart as no reversal cross
are seen. All oscillators are pointing to the continuation of the trend, and the
next target price is now 1.0650.

The Wild Card
* CRUDE OIL
Oil is traded at historical levels of more than 101.00, and shows no room for
hesitation. All technical indicators on all time frames are showing that the
direction is up and the momentum is extremely high.
forex traders should use this momentum to swing into the trend, and join oil on its
journey to fresh all time highs.

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