Daily Analysis by ForexYard.com

[LonnyFX]

Daily Analysis by http://www.ForexYard.com

USD
Following a quiet Japanese session, the USD is a little changed and trades around the price levels it had previously closed at on Friday. Due to a blank economic calendar from both US and Europe today, we are expecting the trade to remain relatively calm as markets are expecting the major release of the week- the Federal Open Market Committee's interest rate decision tomorrow. The primary focus, however, will not be the decision itself, which is a forgone conclusion. Instead, traders will scrutinize the accompanying statement to see if there is any change of tone.

In light of the recent mixed US economic data, markets are curious of the FOMC’s interpretation and outlook for both inflation and growth. It is important to note that several Board members have turned particularly hawkish in their comments since the September meeting. It will be interesting to see whether additional members will follow suit in this week’s deliberations.

As a consequence of the "wait & see" approach traders take, a tight range trade is expected to continue take place today, which can be exploited for a few pips profit by buying into lows and selling tops.

EUR
As with the USD, no economic news is expected to come from Europe today, leaving the markets some time to digest the EUR's recent gains against the USD and try to base at these levels, ahead of several important indicator starting to release tomorrow with the Euro Zone Current Account for the month of August and Industrial New Orders Data. The focus, however, will be on Wednesday's IFO business climate survey. Following the major disappointment in last week's ZEW economic sentiment survey, traders are looking for a retracement in the IFO as well.
Due to the fact that there is no economic news to move the market today, the currency is expected to trade in a tight range against the majors. This will require a technical trading strategy, identifying significant daily support and resistance levels and trading them.

JPY
After gaining considerable strength against all majors earlier last week, the JPY gave back some of these gains on Friday on the back of a weaker than expected all industry activity data. Furthermore, cool statements from the Bank of Japan Governor Fukui regarding inflation and growth pushed back expectations for an interest rate increase by the central bank before the end of the year.

Japanese economic data due out this week will see September trade balance, and more importantly September CPI. The Bank of Japan’s timeline for policy tightening will likely hinge on incoming inflation data. Further signs of Japan emerging from deflation and trending upward will shift sentiment toward additional rate hikes in early 2007.

Expect the JPY to base at the current price levels. The recent bullish move the currency has made seems rather persuasive, but it will require a little longer for it to continue. In the upcoming days we might see it hover just above 119 against the USD again before it makes another try to break below 118.


Techs
EUR/USD
Trend: Sideways .A bullish MACD intersection develops at -0.0046 on the Daily. RSI is at 45.
Daily support is eyed at 1.2580, then .1.2560 and 1.2500
First resistance level is in the 1.2620 region, then Friday's high at 1.2640. Additional ceiling should emerge at 1.27.

GBP/USD
Trend: Sideways. On the daily, MACD is about to cross to positive territory and RSI has just became bullish, slightly over 50.
Daily support starts at 1.8765 backed by 1.8725 then 1.8670.
First resistance lies at 1.8850, then 1.89 followed by 1.8940.

USD/JPY
Trend: UP. Both daily MACD and RSI are on the bullish side, at 0.44 and 56.8 respectively. Note, however a negative divergence on the MACD, suggesting an impending reversal. On the hourly, all oscillators are at overbought levels.


Daily Analysis by ForexYard.com