Forex Investment and Currency Trading

1 – 3 Month Outlook: Looking for a bottom
The next 1-3 months are critical for USD as the intense challenges facing the US economy are coming to a head. The Federal Reserve, and its global central bank partners, might have done enough to avert a financial calamity, but it is no time to declare victory. Instead, the Fed has to quickly turn its attention back to the intense downside risks from the housing market on the broader US economy. In particular, the sharp decline in US home prices continues unabated, present a distinct downside risk to US household wealth, which [...]

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The USD hovers near record lows versus major currencies, with little prospect for near term improvement. While recent Fed actions may help to stabilize financial system concerns, there are increasing signs of US economic weakening. The Chicago Fed National Activity Index has fallen to levels normally associated with recession, and additional FOMC easing
is likely to push the USD index to new record lows during 2Q 2008.
Residual economic momentum and stubborn headline inflation suggest stable ECB policy through at least the next few months. Strong interest rate support has helped push the EUR TWI (BoE index) to within 1% of its October [...]

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Equities were mixed on Thursday, with Asian markets little changed, Europe rising over 1% in most cases, while US markets were lost between 1-2%. Front-month WTI rose USD 1.35/bbl to USD 107.20. That contract has risen in price each day this week and is now the highest since Tuesday 18 Mar. The futures market moved again to price in more aggressive easing at the 30 Apr FOMC meeting. The market now gives a 54% chance of a 25bps cut and 46% chance of a 50bps cut, whereas on Wednesday there was a 64% chance of a 25bps cut and a [...]

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EUR/USD – Uptrend highlights resistance at 1.5905 and 1.6010.  
EUR/USD reached  price target at 1.5650 this week after a correction held above support at 1.5286. Although the correction was swift, it did allow the daily studies to resolve an overbought divergence. With valuations now at neutral levels, support at 1.5586 and 1.5439 is expected to attract buying interest for a re-test of the secular high at 1.5905. A daily close above this level would affirm the bullish view, targeting secondary resistance levels at 1.6010 and 1.6206. The new target is located at 1.6005 based on bullish view.

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