Last week was a very good week for the US dollar as it continued its appreciation for the fourth straight… … week.

During the previous week, the most notable gain came
against its European counterpart as the oft-traded EUR/USD lost 360 pips by weeks
end and close at 1.4675. In addition, the USD posed quite a remarkable appreciation
vs. the GBP last week. The dollar gained almost 550 pips bringing the British Pound
to its lowest in almost a year.

More remarkable then the numbers was the reason behind the movement, as results from
last week's US economic indicators could be defined as “mixed” at best. Still,
with yet another week dominated by declining Oil prices, the USD was once again the
biggest winner.

This week, the market should begin with lower volatility for the USD, as there are
no real important news releases scheduled for today. Later on this week, the market
can expect significant news from the U.S. that will likely rekindle volatility.
Tuesday will be a very eventful day, as it is packed with market moving indicators
such as Building Permits, PPI, Core PPI and Housing Starts. While initial forecasts
for the aforementioned events are considered to be un-encouraging for dollar
investors, FOMC Member Fisher will give a speech titled “Monetary Policy in a
Technology Driven World” which, if hawkish could strengthen the dollar. Wednesday
will be a day dominated by Oil news as the new found importance of Crude Oil
Inventories should drive market movement for the day. Thursday the Unemployment
Claims and Philadelphia Fed Manufacturing Index indicators should come out with
encouraging results for the US economy and Friday the market's direction will be
derived by the words of Fed Chairman Bernanke speech concerning financial stability.

Today, the NAHB Housing Index is the only expected indicator from the US, and is
expected to provide little to market movement. Investors are advised to follow news
events of the USD counterparts before placing there transactions.

* EUR
Euro-Zone Slowdown Continues To Hurt EUR.
The EUR depreciated versus most of the major currencies last week. The European
currency lost just less than 350 points against the USD, closing below the 1.47
level last Friday. The EUR did see a small bullish trend last week versus the GBP
with a high of 0.7988 on Wednesday, before closing its weekly trading at 0.7871.
This deprecation of the EUR appears to be in direct response to a batch of weak
economic indicators published last week from the Euro-Zone. Industrial Production
and Gross Domestic Product numbers from France, Germany and the whole of the
Euro-Zone all saw lower than expected results, solidifying ECB President Jean-Claude
Trichet's outlook of a slowdown in the Euro-Zone economy.

The crucial economic indicators expected this week probably cause the EUR to have
another bearish week. With a rising USD, it is hard to see the EUR seeing any real
gains with economic data traveling in the opposite direction. Monday and Wednesday
should be calm on the European side as no major indicators are forecasted, however
the rest of the week should prove eventful. On Tuesday the German PPI is expected
to show another month of gains, though it could be offset by ZEW sentiment from the
EZ and Germany. Thursday, Manufacturing PMI data from France, Germany and the whole
of the EZ could be vital to EUR recovery, however current forecasts show no real
change in the data from last month.

The early morning release of Trade Balance was the sole economic indicator expected
from the European economic-zone today. Investors are advised to pay close attention
to the overall market reaction to last weeks EUR/USD sell-off to see how to open the
correct EUR orders.

* JPY
JPY Bullishness Primed To Continue With BoJ Conference on Tap This Week.
The Yen completed last weeks trading session in bullish territory versus a batch of
its major currency rivals. The Japanese currency saw mixed results against the
greenback closing the trading session at 110.55, 30 pips off the weeks starting
point. A notable gain for the JPY was against the Euro, gaining for the third
consecutive week to close at 162.24, shaving almost 350 points off of the EUR/JPY
cross. This bullish result took place despite an overall poor week for economic
indicators that came to light from Japan. Preliminary GDP and Tertiary Industry
Activity Index indicators had a declining trend when they came in at -0.6% and -0.8%
respectively, but were not significant enough to provide any real change in the
overall direction of the JPY.

This week Japan will provide even more indicators to the economic calendar and will
likely contribute to its currency volatility. The Overnight Call Rate, All
Industries Activity Index and Trade Balance are expected to see mixed results.
Investors should look toward the BOJ Press Conference; BOJ Monthly Report and
Monetary Policy Meeting Minutes for any hawkish direction from Japanese officials,
as it could define the JPY's direction this week.

With a slow news day expected throughout the Forex market, JPY investors should keep
up to date with the movement of equity markets to gauge the direction of the JPY for
today.

* Oil
Fay Alert Keeps Oil Up.
Crude Oil is continuing to go through mixed sessions. Since the recent slump of
$111.33 a barrel, the Crude has appreciated and is now being traded around $115 a
barrel.
The sharp rise in Oil prices took place predominantly as a result of the tropical
storm Fay that is threatening the Gulf of Mexico. 'Fay' alert led to a large
evacuation from the working staff on the Gulf, and a sharp price movement was
imminent since the Mexican Gulf accounts for about a fifth of the U.S total oil
production.

However, despite the recent rising prices, it is widely accepted that Crude Oil is
still in the progress of a downtrend, and as long as the storm's damages remains
minimal, Sweet Light is likely to resume its falling prices. Traders are highly
advised to pay attention to Fay's developments as they will probably play a leading
role in Oil's prices for the near future.

Technical News
* EUR/USD
After reaching the low of 1.4658 during the previous week the pair is now showing
sharp bullish correction on a daily chart. However, a bearish cross on the hourly
chart's Slow Stochastic indicates that the bearish trend may resume in a short run.
Thus, going short with tight stops might be the right choice for today.

* GBP/USD
The 4 hour chart shows that the pair's strong bearish move was halted, as the cable
is now going through a bullish session since the beginning of this week. As all
oscillators on the 4 hour chart are also pointing up, it seems that going long might
be preferable.

* USD/JPY
The 4 hour chart is showing that the bullish momentum is weakening, and has turned
slightly bearish. The bearish cross on the Slow Stochastic strengthens the pair's
bearish inclination, and might see a valid target price at 109.00.

* USD/CHF
Ever since the pair reached its peak of over 1.1000, it's been showing bearish
momentum exclusively. As all oscillators on the 4 hour chart are providing bearish
signals, a breach through the 1.0915 level will probably validate the bearish move,
with the next possible target price of 1.0860.

The Wild Card
* EUR/CHF
After a sharp bearish move that took place last weekend, the pair is showing
potential for a reversal. The bullish momentum was originated at the lower border of
the Bollinger Bands, meaning that there is still more room left for this trend.
Forex traders might have a great opportunity to enter the trend at a very
convenient entry price.

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