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Yesterday, the USD dropped to record lows against the EUR due to speculation that the Federal Reserve will cut interest rates later this week as the U.S. housing slump reverberates throughout the economy. Interest-rate futures show around a 90% chance that the Fed will lower its 4.75% overnight lending rate between banks by at least a 0.25% point on Wednesday. In addition, the greenback will find little support given the sharp rally in Crude Oil that has already reached the 92.60 level. Upcoming U.S economic data does not look to help the greenback either. The currency faces major risk this coming week with the release of the Consumer Confidence report, the GDP, the Manufacturing Index and the Non-Farm Payrolls. The aforementioned are expected to show relatively weak figures in comparison to previous months, thus dragging the USD further down. Facing a run of weak U.S. economic data, the USD may drop as low as $1.4500 against the EUR this week.

There could be some movement when former Fed Chairman Alan Greenspan speaks today at a hedge-fund summit in Bermuda. Short of that, there is no real market moving news to be released from the U.S markets. Volatility is soaring, and while the greenback is likely to remain weak and oil strong in coming days, all of this wild price action creates the potential for steep corrections throughout the market.

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Daily Forex Technical Analysis

EUR/USD

The pair has breached a fresh all time high and is now floating at 1.4420. Both the 4 Hour and the daily chart are showing a bearish cross on the slow stochastic, which indicates that there might be a correction back to the 1.4360 level before the next peak will be tested.

GBP/USD

The cable is going through a very strong up trend, and we can see new momentum on the hourly charts growing stronger. The daily chart indicates that the next target price might be around 2.0620.

USD/JPY

The pair is in the middle of a flat channel on the daily chart. The two consecutive doji bars indicate that a move is quite imminent, as the RSI is well below the 20 level. It appears that if the 114.00 will not be breached, than a bullish move will be initiated that might take the pair above the 115.00 again.

USD/CHF

The pair is floating around a major support level of 1.1600. At the moment the pair is failing the break, and is trading at a 30 pip range. If a breach through the 1.1600 level will occur, than we shall probably see a very strong downtrend continue to the 1.1500/1.1550 levels.

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