Bernanke is the reason for the low dollar today.
The dollar was set at new cycle of pressure after Ben Bernanke speech on housing and monetary policy. The top economist is not cared about the low dollar and the actions about the U.S. economy seem not suitable for the low dollar. The forecast for the end of week trading is new low dollar levels against the euro. Test of the levels 1.37 and above are expecting. The forecast today:
Open long EURUSD @ 1.3630/45 Target @ 1.3745.
Euro Outlook
Yesterday, the euro rose to 1.3680 as expected, and lost upside momentum there falling to a low of 1.3562 afterwards, and then recovering to 1.3603 this morning. technically, we are at a flat situation, depending on how we interpret the latest rally’s extension to 1.3685 two days ago… we explained at that time that the euro’s break above 1.3660 generated a bullish signal that may drive it to a retest of this year’s high at 1.3865, and possibly higher… this consumption will remain valid as long as an hourly close below 1.3525 is not registered… the other scenario lies on considering the rally to 1.3685 as a super-extended correction level; thus, the subsequent fall to yesterday’s 1.3562 will be a new downward development that would carry the euro to a break below the last bottom of 1.3359 seen on august 16th, with a potential fall to 1.3265 and 1.3205/1.3190, possibly lower… the price-action in the next sessions will clearly trigger a signal in either direction… watch a break below 1.3520, or a rally above 1.3650 for respectively a euro-bearish or a euro-bullish signal.
Euro Outlook
Stock-markets have recovered, and the turmoil in the subprime mortgage market also showed an apparent semblance of calm…. with worries of risk aversion fading, the rebuilding of carry-trades were revived favouring high-yielding currencies…. the euro gained on the yen, and the dollar remained under pressure once the markets recovered its stability… the euro rose to as high as 1.3685 this morning as participants are still expecting the ecb to hike rates next week… technically the rally above 1.3660 (61.9 pct fibonacci retracement level) is to be considered as a new impulsive wave, and thus it can still extend to 1.3710/25, and possibly to next resistances at 1.3825/40… for the session, expect a slight correction and then the uptrend to resume to 1.3710/25… mr. trichet is expected to deliver a speech today and his remarks about interest rates awaited… the medium-term trend has turned to positive unless an hourly close below 1.3530 confirms a reversal… the long-term trend remains to the upside and will be reversed to euro-bearish only if a daily close below 1.3340 is registered.
Whether the Fed rate cut will be effective?
The interest rates politic are the moving factor for the forex market for most of the traders. This is one of the most important factors for the world exchange crosses. During the whole 2007 till now the Fed keep the interest rates unchanged and followed many speculations what will do the Fed with the interest rates. At the last few weeks’ starts to talk that Fed will fast to cut the interest rates to help to US mortgage sector. Whether it will be a positive news for the dollar or not? Its means how effective will be the rate cut and the affect over the US economy and mortgage sector. The rate cut of 0.5% this year and new 0.5% at the beginning of 2008 will be a good step to stimulate the housing sector and the dollar will up. Otherwise the situation for the dollar remains dark with forecast against the euro of 1.40 and above 2.08 against the pound.
New bad news for the dollar set above 1.36 today.
The dollar was set on pressure again. The ECB signals for expecting new interest rates hike followed by the serious rumors for Fed rate cut on the next meeting are one of the reasons for the weak dollar. On the other side some economists predict that the US economy come into recession and the traders fast to sell the bought dollars after Fed injection in the market. It is expecting new signals for the mortgage sector today with the report of new home sales for July. The dollar felled above 1.36 for euro today and very fast will climb the chart to the record high levels of 1.3850.
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