Forex Trading TV Video Blog

The last few weeks have been characterized by Dollar negativity and even despite small gains last week look forward for future downwards pressure on the USD.
A major concern has become the severity of the problems in the US economy and how the Fed can solve such issues to bring some stability to the failing dollar. Last week’s data from virtually every economic sector in the US reflected the growing instability in what once was the benchmark of global economies.

The Fed’s main intervention has been its monumental cuts in US interest rates, as they have been sliced 225bp over the last 7 months. Today’s Existing Home Sales index should give us a good measure of how well it has worked. With lower interest rates, the housing market should expect to see a boost; however expectations have the index down 1.8% to 4.8M. Some felt the rate cuts would spur on new buyers in the market, specifically low income buyers who wouldn’t necessarily be looking as hard if it weren’t for the combination of low prices and low interest rates.

With the dollar already at dangerously low levels versus the major currencies to start the week, any more negative data will likely drive the dollar to record lows versus the EUR and a handful of others. Remarkably, the greenback has pulled itself out of such holes in the recent past, climbing from record setting lows to the EUR to storm back under 1.45. With the week set to see forecasted drops in Durable goods, GDP, Chicago PMI, personal income and spending as well as what will likely be negative comments from several Fed Governors, the dollar looks set to make a slight bearish push before Fed Chairman Ben Bernanke’s Wednesday remarks. Generally Bernanke does enough to reassure dollar investors to push the legendary currency back up to more respectable levels, regardless of the overall negative outlook on today’s US economy. Look for a falling dollar before pressure from Commodities prices drives the greenback up before weeks end.

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