Today, I would like to continue to address the unprecedented weakening of the USD and the effect it has on major currencies. One of the most exciting things happening in the market over the last few weeks, days and hours are simply the record breaking increase of the Gold and silver. More so we are seeing the commodity related currencies also increase in value to a point of which few have gone and recovered from.The CAD and AUD are both approaching all time highs and continue on a strong uptrend against the USD. Is the USD done??

No, allow me to explain, many analysts across the world agree the recession is over however many believe the road to complete recovery is going to slow and painful, especially in the area of job growth. Fundamental analysis continues to show us higher unemployment rates from the US, the weakness of consumer spending continues to decline or remain flat. However with so much of the world wealth tied into the USD, it is hard to imagine a complete crash, for us traders right now the trend is clear!! We are seeing a weak USD and stronger everything else. In this market we say, “The trend is your friend”

Let’s talk on one of the most popular pair in the world

EUR/USD

The EUR has been moving in a clear uptrend. Today it reached and broke the resistance level of 1.4812. The expectation by many analysts in this market and the next resistance line for the EUR is at the 1.5000 line. Today we have seen the gold piggy back ride on the increase of the EUR with the gold reaching the level of $1065 an oz today!! The trend for this pair is clear, the fundamental and technical analysis is there to support our findings. Continue to look for the entry opportunity for this exciting and volatile pair now!!!

Here are the S&R line for Today:

Support: 1.4850-1.4780-1.4740

Resistance: 1.4890-1.4960-1.5010

AUD/USD

The AUD is refusing to stop its uptrend!! in order to understand the change this pair has made an increase of more than 41% in the last 7 month. We can now see very clearly how this pair continues to move in an uptrend. Moreover we continue to receive good results from Australia that continue to support this uptrend while the US results continue to be mixed.

In a country where agriculture and mining products constitute 60% of exports, it is crucial for us to understand the dramatic impact that commodities have on the currency market and specifically on the Aussie dollar (see this week’s blogs entry talking about the gold). Besides, Australia’s geographic position allows it to maintain trade relations with emerging markets in South-East Asia where trade is done in Aussie dollar not USD, thus continuing to support its uptrend.

In other word, we have more people buying the AUD and selling the USD.

Keep looking at the charts and look for the fundamental announcement coming from Australia and the US that can directly affect this pair

In the case of this pair we will not put any indictors on the chart but rather we will put 2 lines on that chart and view how simple and easy this uptrend is to analyze and see. We will continue to observe this pair closely heading into the fourth and final quarter of the year.

Fundamentals:  We have a few announcements today that will affect the market.

Coming from United Kingdom we have the “PPI Input M/M”. The previous announcement was 2.2% and the forecast for today is -0.9%. (08:30 GMT). A few more announcements are also coming. One is from Canada and it’s the “Employment Change” which will be released at 11:00 GMT. The previous announcement was 27.1K and the forecast for today is 4.9K. We also have the “Unemployment Rate” coming from Canada, the previous announcement was 8.7% and the forecast for today is 8.8% (11:00 GMT). From the US we will have the “Trade Balance” previous announcement was -32.0B and the forecast for today is -32.8B (12:30 GMT). Also don’t miss the “BOC Business Outlook Survey” AT (13:00 GMT).

Alright, so before we start today let’s see how our review yesterday and what happened with the AUS/USD. As you remember yesterday we talked about the amazing trend this pair has and how over the last few month we saw the great uptrend this pair offered us ( I will show you how much money you could have made yesterday with this pair).

Now let us talk more about the G7 (meeting of the finance ministers from a group of seven industrialized nations), as Forex traders we receive some very interesting news from those ministers and world leaders. All leaders made a bold statement expressing support for a strong dollar. The joint statement after their meeting in Istanbul was identical to an earlier statement of April “We come back and strengthen the common interest of our strong In recent months we began to see signs of global economic recovery, continuous improvement in conditions in the capital markets. However, there is no room for complacency, since the growth forecast is still not stable labor market conditions have not improved. To recovery will be based, we leave the support mechanisms in economics “, the ministerial statement said.  The ministers are seeking to strengthen the global market by indicating what they would like to see however we are still seeing a weaker buck today and the big question is, when will they intervene and make it a stronger dollar?

Fundamentals:  We have a few announcements today which will affect the market. Coming from United Kingdom we have the “Manufacturing Production M/M”. The previous announcement was 0.9% and the forecast for today is 0.4%. (08:30  GMT). Two more announcements coming in from Canada “Building Permits M/M” which will be released at 12:30 GMT. The previous announcement was -11.4% and the forecast for today is 4.5%. We have the “Ivey PMI”. The previous announcement was 55.7 and the forecast for today is 56.6. (14:00 GMT)

USD/CAD

The USD has lost it power over the last 3 days after it appeared like the USD was getting stronger.  We know that over the last few weeks we are seeing more sales of the USD and more buyers of the CAD and those actions are increasing the value of the Loonie. As we all know over the last 3 quarters the USD has been dropping against the majors against the EUR alone it is down 15% Y/Y already. Today we will wait and see what the result from Canada will bring today. Those results can give a strong indicator as to the direction of the CAD. I will Put Support and resistance lines so we can get a much better feel to where this pair goes. In a technical point of view we used a moving average of 30 days on a weekly and daily chart and with both it appears to be a down trend.

Fundamentals:  We have a few announcements today which will affect the market.

Coming from US we have the “Jobless claim”. The previous announcement was 545.0k and the forecast for today is 550.0k. (12:30  GMT).

one more announcement coming in from US “Home sales” which will be released at  14:00 GMT. The previous announcement was 5.24m and the forecast for today is 5.35m.

There are 2 types of analysis that are commonly used in the Forex market:

1. Fundamental analysis

2. Technical analysis

There is a constant debate as to which of these is more accurate. I’ve found that  the best analysis’s  are the ones that incorporate a little bit of both

One of the most important tools for analyzing the Forex market are the Support and Resistant lines.

Here’s how the support and resistance points are recognized:

When the market moves up and then pulls back, the highest point it  reaches before it pulling back is a  considered the resistance point.

Once the currency changes directions, the lowest point it reaches becomes the support line.

Once the Support and Resistance lines are established we can use them to position ourselves on the charts following the market trends while safeguarding our positions as well.

My next review will illustrate how to use this tool to perform Technical Analysis on the charts.

USD/JPY

Over the last few days The pair is having a little difficulties getting under the support  90.30 and staying there. Looks like this pair moving to few new support lines .the market have several bars before that happens, USD/JPY moves without a clear trend on a hour chart, when we are looking over a daily chart we can see a clear downtrend, to make it easy we can find in the last 30 days more sellers of the us dollar and more buyers of the japans yen, over the daily chart it will look as 18 reds bars and 12 blue bars

Keep your eyes open, don’t forget to put the S&R lines