For the first time since December 2005 the futures markets shows a net long position for the USD. This means that traders around the world are beginning to either see the strengthening of the USD as something happening in the near future, or they see the EUR has already reached its peak and is now going to get some heat by Dollar buyers. This rally was triggered by the assumption that the FED is no longer going to cut rates, however EUR/USD will have some trouble breaking below the 1.50 mark until we see the ECB cutting rates so that the rate differential narrows down. Last week ECB maintained the rates unchanged and this week we get releases for CPI and some growth related releases that will give us an outlook of what the ECB might encounter on the next few months.
The week is filled with important releases; Monday began with the release that the futures market had gone dollar bull for the first time since December 2005. This could be the turning point and the release that sets the trend to go south of our graphs. Tuesday shows numbers for US Retail Sales and Consumer Confidence. We don’t expect them to be spectacular but If they have a positive reading we surely will see more US strength. Wednesday brings U.S. CPI and a high number will further confirm that rate cuts are over for the time being for the FED. Thursday is filled with releases such as: TIC Flows, Empire Manufacturing Index, Philadelphia Fed for the US and EZ GDP and EZ CPI for Europe. Thursday will give us an all around outlook of what is happening in both sides of the pond. Finally Friday y will bring EZ Trade Balance and US Housing, both very important. Remain focused on this volatile week because releases will set the tone and it is in your hands to take advantage and get great profits.
Important Releases | Day/Session | Europe | US | Asia |
| Monday | DOWN | UP | STABLE | |
| UK CPI, US Retail Sales, Cons Conf. | Tuesday | UP | STABLE | STABLE |
| US CPI | Wednesday | DOWN | STABLE | STABLE |
| Ger. GDP, CPI, EZ CPI, GDPUS TICS, Philly Fed | Thursday | UP | UP…DOWN | DOWN |
| EZ Trade Balance, US housing | Friday | DOWN | DOWN | CLOSED |
Has EUR/USD reached its peak? Is the USD beginning a rally that will take us below 1.40? Well lets not get too exited, we’re on a turning point but this doesn’t mean USD will be strengthening continously for the rest of the year. Remember the US economy is still under a huge amount of pressure and Housing Markets and Credit Crunch are still not over. However things begin to look better for the USD, this means we might not see 1.60 anymore but it doesn’t mean that the next stop is 1.40 right away. Focus and don’t get carried away by market noise. Be patient and fundamentals will show you the way into getting great profits.
DAILY GRAPH
EUR/USD crossed our whole channel. It is now trying to get back in but it is showing to be stronger every day. Fundamentals will rule the market this week but keep in mind that technical analysis will help you deciding when to get in and out.
Our analysis indicates Short EUR/USD every time it reaches 1.5520
• Take Profit 1:1.5415
• Take Profit 2: 1.5350