With Non Farm Payroll on Tap Will EUR/USD test 1.55? Yesterday was an amazing trading day for the USD. The… … USD saw bullish trends against all its currency counterparts.

The increase in the greenback's value was most
notable against the EUR as the cross feel from above 1.57 to under 1.56 and against
the GBP as the cross fell from the midd 1.99's to under 1.98. The Dollar's rally was
sparked by the better than expected S&P/CS HPI Composite-20 and Consumer Confidence
Index. Simultaneously, the Crude Oil prices fell sharply, which also helped the USD
gain strength.

The two economic releases that were announced yesterday both helped the bullish
trends by the USD. The S&P/CS HPI Composite-20, which measures the change in the
price of single-family homes in 20 metropolitan areas did drop but less than
expected. More assurance was sparked by the Consumer Confidence Index which was
forecasted to be lower than the previous reading, but was actually higher at
51.9.The greenback also took advantage of the drop in Crude Oil prices that occurred
because of beliefs that record prices are eroding the world's thirst for energy. The
strength in the American economy was shown by the Dow Jones and S&P 500 gains of
over 2% yesterday.

On tap from the US today, all eyes will be on the very important ADP Nonfarm
Employment Change. This estimate by ADP, which measures the estimated change in the
number of employed people during the previous month, excluding the farming industry
and government, was off last month and was valued at a very low -79K. Today's
release is expected to be negative, but not as low as the previous reading and
should help strengthen the USD. The other impactful release today will be the Crude
Oil Inventories, which are expected to remain negative, but not as low as last week,
which will be very interesting for the Crude Oil prices that are on a continuous
bearish trend.

* EUR
Volatile Leads Trading To Major Sell off For EUR
The Euro lost grounds to most of its currency counterparts, besides the CHF in
yesterday's trading. It was an interesting day for the EUR, as the only economic
data that was released was the German Prelim CPI, which rose and beat the forecast.
As the USD saw bullish trends based on its data releases, the EUR took a hit. Adding
to the bearish trend of the EUR that was based on its rivals' bullishness was news
that came from Slovenia. Slovenia's Economy Minister said on Tuesday the adoption of
the euro in 2007 made an important contribution to a rise in the country's inflation
which reached a 6-year high in June. Vizjak also noted that rounding up of prices
after euro adoption and the difficulties people had in making the transition to the
new currency contributed a lot to inflation. As the EUR has been adopted in most of
Europe, it was alarming for trades to hear these negatives words coming from one of
the new Euro members.

Today should be a quiet trading day for the Euro as there is only one economic
release expected to come out of the Euro-Zone. The Consumer Confidence is expected
to continue declining as the mood of consumers in regard to economic conditions
seems to be weakening in the Euro-Zone. Another important factor for the Euro will
be the Crude Oil price, which should see volatility based on the American Crude Oil
Inventories and the ADP's effect on the USD's value.

* JPY
Manufacturing PMI on Tap
Besides the bearishness against the USD, the JPY saw bullish trends against all of
its other major currency counterparts. The USD was unstoppable because of its
economic data and like the Dollar's other crosses, the JPY lost grounds against it,
but the JPY showed its strength against its other crosses. The export based Japanese
economy took advantage of the drop in Crude Oil prices, which should help lower the
transportation prices of the Japanese goods across the world. The only data release
that was announced yesterday was the Prelim Industrial Production, which saw a
bigger than expected decline in June as makers of cars and semiconductor chip
processing equipment cut production to deal with rising inventories and slowing
demand.

There will only be one data release from Japan today as the Manufacturing PMI will
be announced during late trading. There is no official forecast for this measure and
a rising trend will have a positive effect on the nation's currency. Besides the
JPY's crosses' trading trends, the Crude Oil will be the other major influence and
the Yen will need the bearishness of the Black Gold to continue in order for the JPY
to keep strengthening.

* Oil
Oil Drops Over Shrinking Demand
Crude Oil prices eased in US trading yesterday ahead of a weekly US report on energy
stockpiles expected to reinforce worries over shrinking demand.
New York's main contract, light sweet crude for September delivery, was 42 cents
lower at 121.77 dollars a barrel after slumping 2.54 dollars to 122.19 Tuesday on
the New York Mercantile Exchange. The Oil dropped mainly because of a strengthening
U.S. dollar and signs that gasoline demand may extend declines.

Oil market's bearish mood has also prompted some investors to move their funds out
of oil. Prices have dropped about 17% since they touched record highs above 147
dollars a barrel on July 11th.

The US Department of Energy is expected to release today its weekly report on energy
stockpiles in the country. The inventory data will probably continue to show a
demand slowdown in the US and will likely add to the worries over a slackening oil
demand.

In addition to a slowing demand, the supply is also growing. The EIA says Saudi
Arabia, the world's largest producer and home to the world's biggest oil reserves,
produced 10.6 million barrels per day in 2006, little changed from 1980 production
of 10.3 million barrels. The kingdom recently announced its intention to increase
production capacity to 12.5 million barrels per day by mid-2009. Its ability to do
so will be watched closely by those experts who contend that Saudi oil fields either
have reached or will reach peak production in this decade.

Technical News
* EUR/USD
The hourlies show that this pair is continuing its bearish rally and indications are
that there is still steam left in the downtrend. The pair is in the middle of a very
strong downtrend and is testing fresh lows on a daily basis. The support level of
1.5600 has been breached and a bearish cross on the 4 hour cart's Slow Stochastic
suggests further bearish move is impending. Going short might be preferable today,
as the next target price might be around 1.5500.

* GBP/USD
There is a very distinct bearish channel forming on the hourly chart. The Slow
Stochastic and the RSI on the hourlies support this bearish notion indicating there
is more room in this movement. As well all the oscillators on the daily chart point
to this bearish conception. Thus going short might be a preferable strategy for
today.

* USD/JPY
This pair has through a relatively choppy trading session of late and seems to be
unable to pick up a sustained trend. Bollinger bands are widened indicating
increased volatility. Indications on the 4H are giving a bullish signal and this
pair should target the 108.50 level today.

* USD/CHF
The Slow Stochastic on the 4 hour chart formed a bearish cross in the overbought
territory. Yet this bearish cross is around the 85 Slow Stochastic zone, indicating
that the pair can go in either direction in the next few hours. As such investors
are advised to wait for clearer signals before entering the market.

The Wild Card
* Silver
The Slow Stochastic on the 4 hour chart points towards a current bullish momentum.
The daily Slow Stochastic strongly supports this notion. This might be a great
opportunity for
forex traders to join a very promising bullish trend.

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