New York Session – January 31, 2011 4:03 PM

January 31, 2011

The U.S. dollar traded softer as inflation concerns sent the euro and the British pound higher. The market continued to react to the higher Eurozone inflation data and hawkish comments from the Bank of England’s Martin Weale. EUR/USD traded as high as nearly 1.3740 before correcting lower to current levels just below 1.37. Cable surged above 1.60 and is currently trading around 1.6020. Full text » | Technorati | Stumble It!

London Session – January 31, 2011 9:19 AM

January 31, 2011

Markets alert to escalating Middle East tensions: Full text » | Technorati | Stumble It!

Inflation in the Euro Zone Above Target

January 31, 2011

Euro in forex trading

Inflation in the euro zone is still above the target set by the European Central Bank. The news is helping the euro today in forex trading on the currency market. Also helping is the fact that Suez Canal shipping hasn’t yet been seriously interrupted by the protest happening in Egypt.

European stocks, though, are lower as bank troubles continue and as sovereign debt concerns in Europe continue to plague leaders. The higher inflation means that the ECB is unlikely to cut interest rates to help euro zone growth.

However, with so much concern about the euro in forex trading, and with economic growth outside of Germany, it is uncertain how long the euro will remain higher in forex trading.

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Asia Session – January 31, 2011 1:27 AM

January 31, 2011

Risk aversion took the markets by storm to begin the week as political unrest in Egypt has sent investors looking for safe haven currencies. The protests and higher body count in Egypt that currently show no signs of resolution have markets fearing the unrest could spread across the middle east, pushing traders to flee riskier assets and seek the perceived safety of the yen, Swiss Franc and US Dollar. The fear caused a gap on the currency open, with the EUR/USD opening about 25 pips lower near 1.3585 and the AUD/USD opening near .9890, almost 50 pips lower than Friday’s close. As traders recently feared sovereign debt contagion among EU nations, the fear is now a political unrest contagion that could have the likes of Saudi Arabia in its cue with Tunisia and Egypt already victimized. Full text » | Technorati | Stumble It!

Is the Euro Overbought in Forex Trading?

January 28, 2011

A euro correction could be coming

The euro is lower against the U.S. dollar today, heading down as news about an accelerating U.S. economic recovery is compared to continued sovereign debt issues in Europe. However, even though the euro is slightly lower, there is a good chance that it is overbought, still.

Indeed, FX Street castigates European officials for "magical thinking" — and for market players for going along with it. Here is what FX Street has to say about the euro forex trading forecast:

The euro is, without doubt, overbought—but that doesn’t mean you can sell it and expect to make a gain. Market News notes that “From the mid-January lows around $1.2871 to Thursday’s peak, the euro has risen 6.7%. Market players eye a retest of the November 22 highs at $1.3786, and then the psychological $1.3800 level. It would take a move back below prior peaks/now support around $1.3500 to even begin to negate the current downtrend, traders said.” We would put a downside breakout point much higher, like 1.3620 (the midpoint of two upside recovery bars on the 360-minute chart this week), but it’s all guessing. Yes, a correction will come, and no, we don’t know what will trigger it or how far it will go.

Euro zone leaders are not doing enough to offset the sovereign debt crisis in Europe, and there are still plenty of issues to deal. In countries other than Germany — and maybe France — the economic growth needed to offset the sovereign debt problems just isn’t enough. Germany can’t carry the whole euro zone on its own. And its people don’t want to. China has pledged its support, but even that may not be enough.

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U.S. Dollar Gains in Forex Trading

January 28, 2011

Better economic outlook helps greenback in currency trading

Interesting things are happening with the U.S. dollar right now in forex trading. Greenback is gaining in currency trading on the FX market as different items contribute to gains.

First of all, the U.S. dollar got a boost from the better than expected consumer data just released. Even though fourth quarter GDP was a little lower than expected, there are still indications that the U.S. economic recovery is picking up the pace.

However, there is another reason that the U.S. dollar is getting a boost: Risk aversion. The U.S. stock market is plummeting today on some disappointing news from some bellwethers, and that is resulting in some degree of risk aversion, helping the U.S. dollar as a safe haven currency.

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Asia Session – January 28, 2011 6:43 AM

January 28, 2011

Markets ponder the prospect of strong US growth… Full text » | Technorati | Stumble It!

Asia Session – January 28, 2011 1:33 AM

January 28, 2011

The end of the trade week in Asia was tediously quiet with the EUR/USD giving up some ground to profit takers ahead of the weekend. The EUR/USD slid from 1.3740 to return to 1.3700 levels that the pair frequented in yesterday’s session. Adding to the profit taking was a bit of weakness due to the reluctance of EU members Finland, the Netherlands, Austria and Slovakia to endorse an expansion of EFSF funds. The EU has been trying to expand the breadth of the rescue fund in order to help appease investor fears of member bailouts potentially crippling the European Union.    Full text » | Technorati | Stumble It!

New York Session – January 27, 2011 4:02 PM

January 27, 2011

The U.S. dollar traded mixed today, firmer against most of the majors but weakened against the euro and kiwi. The yen crosses moved higher in the wake of Japan’s downgraded credit rating and USD/JPY was up on the day although unable to sustain a move above 83.00. USD/JPY is currently trading around 82.80 – just under the 100-day sma. EUR/USD looked comfortable above the 1.3700 figure but struggled to hold above 1.3750 and is currently trading around 1.3735. Full text » | Technorati | Stumble It!

Euro Strengthens, Even as Concerns about Sovereign Debt Persist

January 27, 2011

Euro higher in forex trading as talk at Davos looks at problems

The World Economic Forum is going on in Davos, and many key players are still concerned about what is happening in the euro zone. Indeed, concerns are that sovereign debt problems may not be fixed by bailouts. However, French president Sarkozy insists that turning away from the euro is not option.

And, even with the rumblings today, the euro is still higher in forex trading against the U.S. dollar. The greenback is showing weakness today, thanks to uncertainty over coming economic data. Additionally, the news that jobless claims increased is shaking things up a bit for the greenback. Plus, with the Japanese downgrade, speculation is that the U.S. could be next.

Even though the euro is doing well today in forex trading on the currency market, it doesn’t mean that it will remain so. Continued sovereign debt problems could send the euro lower again, or concern about economic recovery could send forex traders to the U.S. dollar for save haven.

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