Many forex traders witnessing the strong bearish trends across the USD pairs and crosses have been wondering when it will come to an end. As last week’s U.S. housing market data and unemployment figures proved worse than forecast, mixed with a boom in confidence for Euro-Zone economies such as Germany, the USD went negative. However, this week’s data forecasts could create the rumblings of a reversal for the greenback. This exciting volatility is where money is made in the forex world; don’t miss out!
The American Dollar saw an extremely bearish session during last week’s trading as it dropped in value against all the major currencies. The EUR/USD actually rose to the 1.4000 level for the first time in 5 months!
It appears that two main economic indicators have initiated the USD’s downfall on all fronts throughout last week. For starters, the U.S Building Permits report revealed that hopes for an improvement in the U.S housing sector are currently unrealistic, as only 490,000 new residential building permits were issued during April. Many analysts have assumed that the first significant step in pulling out of the recession will be shown from the housing sector. The reason is very simple, it was the mortgages crisis that caused this gloomy economic condition, and a real improvement in the housing sector would have shown that both investors and the major banks have regained confidence in American real-estate, which should be a sign for all others that the economy is recuperating.
In addition, on Thursday, the weekly Unemployment Claims showed that 631,000 individuals have filed for unemployment insurance for the first time, making it the 16th week in a row on which over 600K people have done so. The combination of these two publications had a very clear effect on the Dollar, and its drop in value was only a matter of time.
As for the week ahead, a bundle of data is expected from the U.S economy, and traders should take notice of all of the major indicators. The Consumer Confidence report is expected on Tuesday, and analysts predict that the best result in six months may be published. This has the potential effect of reversing trends in the forex market, as it will show that people are regaining their confidence in the US economy, and in their government to improve the situation in the near future. The New Home Sales on Thursday will probably steal all of the attention on a busy news day, as the housing sector seems to have the biggest impact on the USD for the moment.
