Forex Crunch No Green Shoots for the Greenback

Posted: 08 Sep 2009 03:31 AM PDT

The US dollar gives in to pressure and falls across the board – with serious breakouts, including in EUR/USD. This time it isn’t only risk aversion: also the Japanese Yen falls, and the correlation between the two safe haven currencies is broken. US Dollar index is in the lowest levels in a year. Only the British Pound didn’t break technical barriers and may bounce back down.

Breakouts

The Australian dollar began with a small breakout on Friday. It passed 0.85. AUD/USD is now at 0.8625. The breakout is certainly confirmed. The kiwi followed with a breakout above 0.69 on Monday. NZD/USD is now at 0.6979.

The most annoying range trading currency pair is the world’s most popular one: EUR/USD. The breakout of 1.4444 this morning marks the dollar’s fall. EUR/USD now trades at 1.4489.

For in-depth technical analyses of EUR/USD, read Mohammed Isah and Casey Stubbs.

The dollar’s fall can be seen in the US dollar index, that is back to the levels of September 2008, at the height of the crisis. On its way down, the US dollar index broke the previous bottom that was reached at the beginning of August. It now stands at 77.40.

Yen Correlation broken

During the crisis, dollar weakness was at times the result of risk appetite. In these cases, the Japanese Yen would suffer as well. I had recommended trading the Yen crosses in such times, since the Yen would weaken alongside the dollar.

But this time it’s broken: USD/JPY falls as well, reaching deep lows of 92.09, still above the support line at 91.73.

USD/CAD is now well under the support line of 1.08, trading at 1.0685. USD/CHF broke support and is at a YTD low of 1.0476.

Pound Left Behind

Although the British Pound is also making a very nice move upwards, it’s still far enough from the resistance line of 1.6660. GBP/USD moved today about 200 pip up to 1.6550, but is still about a 100 pips short of breaking. When this trend will reversed, the British Pound has more room to fall than other currencies that did make the breakout.

I’ll keep on following the events this long awaited breakout. All the quotes were made during the time of writing.

For a look forward on the week’s events, read the Forex Weekly Outlook.

Forex Daily Outlook – September 8th 2009

Posted: 07 Sep 2009 11:14 PM PDT

The week opened with a breakout of NZD/USD and the confirmation of the AUD/USD breakout. The dollar’s weakness is felt across the board. Without any major American releases after the Labor Day holiday, British Manufacturing Production and German Industrial Production are the highlights of today. Let’s see what’s up for today.

Australian NAB Business Confidence continued the positive trend and rose from 10 to 18 points. The Aussie’s breakout was confirmed at the beginning of the new trading week.

For more on AUD/USD, read the Australian Dollar Outlook.

Swiss Unemployment Rate surprised with a rise to 4%, less than 4.1% that was expected.

German Trade Balance showed a better than expected surplus – 12.4 billion. . German Industrial Production is expected to turn positive and rise by 1.6% this time. Yesterday’s good German Factory Orders helped the Euro. Later in Europe, Deutsche Bundesbank President Axel Weber will speak. He sure can shake the EUR/USD.

For more on the Euro, read the EUR/USD Outlook.

In Britain, Manufacturing Production is expected to continue rising – this time by 0.3%. Also note the Industrial Production release. Later in Britain, NIESR GDP Estimate will give an updated though not official estimate on the British economy’s performance. Did it return to growth in the third quarter?

Near the end of the day, British Nationwide Consumer Confidence survey is released. The positive trend is expected to continue – a rise from 60 to 62 is expected.

For more on the British Pound, check out the GBP/USD Outlook.

After a long holiday weekend, Canadians return to work and so do the indicators: Building Permits are expected to rise by 0.5% after a nice rise of 1% last month. This major indicator may help the USD/CAD breach the support line.

For more on the loonie, read the Canadian Dollar Outlook.

In the US, the first release for the week is Consumer Credit, which is expected to squeeze to 3.8 billion.

That’s it. Happy forex trading!