Amidst once again surprising economic numbers, the greenback stayed relatively steady on Monday. The greenback did fall in the early… … hours of Tuesday, against 14 of the 16 major currencies, challenging investors to determine how and when the greenback will end its slide.

The Institute of Supply Management (ISM) released its Non-Manufacturing index at 55.8, up one point from its previous 54.8 mark; forecasts
initially predicted a one point drop. The index measures the activity of purchases
made by purchasing managers in the service sector and allowed the greenback some
breathing room after last week's disaster. Yesterday, saw Fed Governor Mishkin
announce that he will “carefully assess economic data” before considering any
changes in US economic policies. As oil prices continue to rise and the US financial
landscape is in turmoil, the Fed has held its ground in defending its decisions to
hold out on any further action.

Traders are at a standstill due to the differences in opinion between the majority
of investors and the Fed's themselves. Many investors believe that the US will have
no choice but to cut rates even more in order to withstand the damage that the
winter will bring in regards to gasoline prices. The Fed, in statements released by
Mishkin, Rogers and Gross reiterated their faith in economic data, and went so far
as to say that the quarter point interest rate cut could even be reversed if all
went well before year's end.

Today look to see even more discussions regarding such issues as Fed Chairman Ben
Bernanke speaks in San Antonio. Bernanke will address the audience at the ACCION
Texas Summit on Microfinance, about community development. It is safe to say that
the market will fluctuate around the time of his speech, as Bernanke is known for
leaving hints regarding future policies in his speeches.

* EUR
The EUR entered this week in positive territory as it finished last week with
all-time highs against the greenback. News has been dominated predominately by the
US, but this week sees the tide change with major news events on the EU schedule.

Investors saw the EUR/USD move yesterday between a low of 1.4440 and highs at 1.4530
levels. Similar range trading should be expected today as there are no real major
events on tap. PPI, Retail Sales and Service PMI are to be released this morning,
with not much movement expected to come from them as investors will try and hold
positions ahead of Thursday's ECB Interest Rate statement. Sentiment is that the
ECB will hike rates to offset current economic trends regarding the EUR. Today
should see much of the same in regard to the EUR as investors will most likely see
the EUR stay strong.

* JPY
Yesterday, BOJ Chairman Toshihiko Fukui Spoke and hinted that a future interest rate
hike might take place sooner that we expected.
Since then we saw the JPY strengthen against all across the board.
Fukui added that a timely interest rate hike is needed and that keeping rates too
low could pose risks in the future that the BOJ would like to avoid.
We are expecting the JPY to maintain its strength against the majors, and carry
trades are more likely to reduce especially against the USD until the rate hike will
take place.
Tomorrow, Core Machinery Orders is expected to be released. The figure measures the
total value of new orders placed with machine manufacturers, excluding orders for
items with a volatile sales cycle. The forecasted figure is -2.0% which is better
in comparison to the previous figure (-7.7%) implying a rising trend which is a
positive effect on the JPY ,since if the manufacturers increase their purchasing of
machinery it signals that the manufacturing industry is in an expansionary phase.

It appears that the JPY will continue to float on relatively quiet waters, and that
the direction will be directly effected by the ongoing USD weakness.

Technical News
* EUR/USD
Daily and hourly indicators are in neutral territory which indicates range trading
today, traders need to pay attention to the bullish flag structure which is
establishing on the 4 H chart and may signal an upcoming bullish trend however not
yet completed. In case of completion, this pair may head to 118.83 the Fibonacci
resistance (61.8%) and then going long seems to be the preferable strategy.

* GBP/USD
After losing more than 230 pips in the last three days, the bearish sentiment
continues. The daily charts are showing that there is still more room to run and the
hourlies are showing a light oversold status. A preferable strategy might be to look
for a good short entry point.

* USD/JPY
Recent unwinding move seems to have bottomed at 114.00 and the pair has gone up
since Friday. The daily studies are bullish, and the hourlies support the bullish
notion. A breach through 115.00 will validate the move, and create a great
opportunity for a long run buying position.

* USD/CHF
The bearish rally continues at full steam, and is confirmed with extremely bearish
dailies. The hourlies are a bit oversold, which indicates that traders should look
for a high entry point before resuming the down trend which appears to have plenty
of room to run. A breach through 1.1495 will validate the move and take it to the
1.1480 zone

The Wild Card
* Crude Oil
The strong momentum continues. Crude Oil now consolidates around 94.90 with a clear
intention to continue the uptrend. The dailies are showing the third consecutive
bearish cross. That provides

Forex traders with a great opportunity to establish an entry point and continue the
bullish ride.

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