Aug 12 2008
The USD Bullish Rally Continues
Yesterday, the USD rallied against all the major counterparts. The EUR/USD dropped over 150 pips, descending below the 1.4900 level. The dollar experienced similar sessions vs. the GBP and the CHF as well.
The USD’s rally sent the EUR/USD pair to a 5.5 month low, as the pair breached the 1.4900 support level. The clearest reason for the strong downtrend that the pair went through was the continuation of falling Oil prices. A barrel of Sweet Crude traded beneath $113 yesterday, down from $116 last week, boosting the USD further and further. In addition, the ongoing improvement in U.S economic outlook over the past month strongly contributed to push the USD up to its current peak.
Looking ahead today, the most important financial indicator scheduled from the U.S economy is the Trade Balance. Analysts forecast that the U.S deficit will grow from $-59.8B in May to $-61.8B in June. Another indicator that will see light is the Investor’s Business Daily Economic Optimism. This index conducts a survey of about 900 consumers which asks respondents to rate the relative level of economic conditions including economic outlook, personal financial outlook and confidence in federal economic policies; it’s expected to deliver a more positive U.S consumer’s opinion on their economy condition. As the USD’s bullish voyage is proceeding for almost 3 straight weeks, it seems that a minor correction might be quite unavoidable. Negative data, accompanied by a halt in dropping Oil prices, might generate such scenario for the USD’s leading crosses. Traders are strongly advised to pay attention to today’s Trade Balance announcement, as a weaker than expected result may launch such a correction.
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