After ending last week slightly higher versus most of its currency counterparts, the USD began this week’s trading with a continuation of its recent uptrend, appreciating against every currency rival except the JPY. Dropping below the 1.3000 level against the EUR this morning, and near 1.4700 against the Pound, the Dollar’s strength appears to be on schedule for further upward movement against these majors.

The only pair to beat out the USD this morning has been the Japanese Yen,
considering many traders are beginning to hedge their bets on the value of the
Dollar as the number one safe-haven investment. This may come as a result of the
perception that the Dollar may see weakness in the future as investors pull out of
the forex market and back into the stock market due to increased risk appetite and
uncertainty in various equity markets. As the future decisions of the European
Central Bank (ECB) appear to be foggy, traders are not expecting much correction to
take place in the EUR/USD’s recent downward movement and are instead going short on
the EUR where possible.

Last week, traders saw a flurry of economic news affecting the American economy and
practically zero news emanating from Europe. This week appears to be the exact
opposite. A blizzard of economic events is expected from the Euro-Zone and very
little is scheduled to be released from the United States. Forex traders should
definitely pay closer attention to the EUR and GBP markets this week as they will be
in the driver’s seat of the market for the days ahead.

* EUR
EUR’s Movement Negative, but Busy News Week May Prove Fruitful
The EUR apparently can’t catch a break these days. With a steady depreciation
against the majors, the EUR looks like last week’s loser, and may continue to hold
that title throughout this week as well. Dropping below important price barriers
against the USD and JPY, but holding steady against the GBP, the EUR’s value may be
due to recent analysis of the European Central Bank (ECB) than anything else.

Delivering a speech in which uncertainty seemed to be the major headline, ECB
President Jean-Claude Trichet apparently only made matters worse for the 16-nation
currency. This indecisiveness no doubt comes from the fundamental differences in
solutions perceived to be necessary for the economic conditions of the diverse
countries which make up the European Monetary Union (EMU). With a multitude of
ethnic, linguistic, and cultural backgrounds, each member country brings with it a
unique perspective on this recent crisis as well as a different interpretation on
what is required to fix this downturn for the interests of each individual country.
Disunity reigns supreme in Europe, and the U.S. and Japanese currencies are the
beneficiaries.

On the upside for the EUR this week is the slew of data emanating from the Euro-Zone
regional economy. With an abnormally busy news week, the Euro-Zone may, for the
first time in months, outshine the Dollar and take control of the forex market this
week. Traders will absolutely want to tune in to the economic indicators emanating
from Europe and the U.K. throughout the week. Most importantly are the two
confidence reports, the ZEW Sentiment and German Ifo Business Climate reports, due
out Wednesday and Friday respectively.

* JPY
Gains on Wall Street and an Indecisive ECB Leads JPY Higher
The Japanese Yen appears to be on the receiving end of large buying session as
traders pounce into the Asian currency to hedge against less certain investments
like the EUR, GBP and even the U.S. Dollar. Dropping below key support levels
against the EUR and GBP, the JPY appears to be on a fresh bullish run which could
have much more room to grow if markets continue like they have the past few days.

Slicing through the 145.80 price level against the Pound, and below 129.00 against
the EUR, the Yen’s recent strength may have much to do with the recent uncertainty
in monetary policy decisions within the European Central Bank (ECB) and the rising
uptrend in the U.S. stock markets. As usual, this week will not be seeing much
economic news coming from the island economy, but with so much attention focused on
Wall Street and a stale-mated ECB lately, Japan may not need to take the reins to
steer its own market to new heights. Traders should be keeping an eye on the
European markets this week as its news will no doubt be the guiding force behind
this week’s market.

* OIL
Global Demand for Oil May Continue Falling; Will its Price Follow?
After last Friday’s jump in oil prices, the cost of buying a barrel of Light Sweet
Crude has apparently begun to fall after reports showed that the U.S. economy is
still forecasting a contraction. With the world’s top oil consumer declaring that
it’s demand for Crude Oil is going to continue falling, and with current production
levels being estimated as too high to support prices, traders may be seeing the
start of a new downward trend in the price of Crude Oil this week.

Starting last Friday between $51 and $52 per barrel, the price of Crude Oil
subsequently jumped to as high as $53 by mid-day. However, during today’s early
trading hours, the price of Crude Oil has apparently begun to decline and is
currently trading at $51.50. With a few analysts claiming that oil remains slightly
over-valued, we could see a sell-off in black gold through late-afternoon today.

Technical News
* EUR/USD
There is a very accurate bearish channel forming on the hourly chart, as the pair is
now traded around 1.3005. A breach through that level will validate a very strong
bearish move with a potential target price of 1.2945. Going short might be a wise
choice today.

* GBP/USD
The cable is continuing to deliver coherent bearish signals, and is now traded
around the 1.4700 level. On the hourly chart, the current price has dropped beneath
the Bollinger Bands lower boarder, suggesting that the pair should drop once more.
Going short might be the right choice today.

* USD/JPY
After a few days of falling prices, it seems that the pair has reached its bearish
peak at 98.90. As all oscillators on the 1 hour chart are pointing up, a bullish
correction might be impending. Going long with tight stops could be a good strategy

* USD/CHF
The pair has breached through the Fibonacci key level of 1.1607, and all oscillators
on the 4 hours chart are indicating further bullish movement. The hourlies Bollinger
Bands are showing that the price has crossed its upper border, signaling that the
current trend should continue, as the pair’s new target price might be 1.1719.

The Wild Card
* EUR/GBP
After recently peaking at the 0.9004 level, the pair is consistently dropping.
Currently, as all indicators are giving bearish signals, it appears that the pair
will extend its downtrend. This might be a great opportunity for
forex traders to join a very popular trend.

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