Upside seen capped for euro/dollar

Liran Kapeluto (22 August 2008)

EUR/USD: "$1.4981 caps the topside, heavy below initial resistance $1.4949.

" USD/JPY: "Bull trend violated momentarily, but only a break of 108.03 yen Fibonacci retracement would open the door toward the 107.27/21 to 106.55/39 support zone. Resistance now at 109.53."
GBP/USD: "Momentum failed to sustain above $1.8787, likely to test $1.8606, pressure on $1.8513 is still high.

EUR/USD: "The euro surprised us and closed above its key 9-day moving average yesterday (this is currently located at $1.4817 today). However with longer term momentum still negative and the market still indicated to be in a downtrend, we continue to view gains are corrective and vulnerable to fail on the upside (maximum upside risk $1.4932/downtrend location)".

EUR/JPY: "Prices should hold above 160.00 today, although a weekly close below 161.40 yen might add to bearish pressure next week, as it should if we hold below 162.65 today. Late this month we continue to expect a drop to 158.00, and further out a slide to 152.00. Below here and the long term picture gets seriously interesting."

UK Economy Freezes Sending the Sterling Lower

Sagiv Perez (22 August 2008)

The prices are about to break the upper band of the standard error challenge since mid April.

The prices broke the MA 20 and 50 lines and are continuing higher.

The MACD is after a bullish cross when the fast line broke the zero line upward and histogram is signaling a rising buying ratio.

The momentum broke the zero line upward.

The RSI is in a bullish trend pointing upward

The Bollinger band are widening signaling for a continuation of the trend

This Week Uncertain for the Dollar after Strong Gains

Last week saw the Dollar make large gains against the majors. It achieved a near 6 month high against the Euro on speculation U.S. consumer spending would keep the world's biggest economy out of recession. Data last week revealed that Euro zone growth slowed in Q2 making future rate hikes unlikely. Tuesday’s economic statement in Germany will give helpful indicators regarding the Euro economy.
Meanwhile Sterling traded near a two year low against the Dollar on the back of weak employment figures and tumbling property prices. Negative UK economic data fuelled speculation that there would be an imminent interest rate cut.The pound fell almost 3 percent against the dollar last week, after Bank of England Governor Marvin King said the housing market faced ``a significant adjustment'' and banks limited loans for homebuyers.
The strong dollar also pushed commodities lower. Last week Gold traded at the lowest level since Oct.26th at $772.98 an ounce. Crude, as high as $147.27 on July 11 has declined 22% as the slowing world economy has curbed demand.
This week the Dollar is showing initial signs of weakness. With US inflation and Government housing results out this week, speculation is growing that the Fed will refrain from raising rates. If these results are confirmed we could well see more downside for the Dollar. Gold, typically an alternative investment against the falling dollar could go higher. In addition, Storm Fay in the Gulf of Mexico is causing a recovery of Crude prices after last week’s dismal showing.