Dollar Declines as Equity Market Rallies

The U.S Dollar fell against most of its major currency pairs yesterday, hitting its lowest level in nearly a year against the EUR, as gains in stocks and commodities prompted investors to wade into riskier currency trades. By yesterday's close, the USD fell against the EUR, pushing the oft-traded currency pair to 1.4603. The Dollar experienced similar behavior against the GBP and closed at 1.66.99.

The Dollar has fallen every day this week against the EUR and Japanese Yen, and it marked its third straight daily decline against the Pound Sterling yesterday. Analysts attributed the fall in the Dollar, which has been treated as a lower risk, safe-haven investment, to growing optimism that the worst of the financial crisis has passed. This has caused investors to buy commodity-linked and higher-yielding currencies, which rallied earlier this week.

A leading indicator released yesterday was U.S. Unemployment Claims. This number handedly beat last week's result. However, it failed to provide strength to the Dollar as investors may be waiting for key data due to be released today to implement their trading strategies.

Looking ahead to today, the most important economic indicator scheduled to be released from the U.S. is the Import Prices at 12:30 GMT. Traders will be paying close attention to today's announcement as a stronger than expected result may boost the USD in the short-term. Traders are also advised to follow Treasury Secretary Timothy Geithner's speech at around 20:45 GMT. This speech is very likely to impact USD volatility. Traders are advised to watch closely, as this is likely to set the pace of the Dollar going into next week's trading.

Daily Technical Analysis

EURUSD Outlook

Although we had a volatile market yesterday, the EURUSD made indecisive movement indicating consolidation after some bullish momentum. A look at daily chart below reveals that bullish scenario is confirmed as the price already breakout above the ascending triangle formation. Technically, ascending formation is consolidation pattern after some bullish movement and tend to continue the bullish scenario especially if price make a breakout to the upside, and that's what happen now. However, CCI in extreme overbought area and heading down on daily chart so I will not surprise if we have some downside corrections at this phase. As long as the pair stay above 1.4446, any downside pressure should be seen as corrections and short positions are not recommended. Immediate resistance at 1.4612 (yesterday's high). Break above that area should trigger further bullish momentum targeting 1.4719.

GBPUSD Outlook

The GBPUSD continued it's bullish momentum yesterday. On h4 chart below we can see that the pair made a breakout from the range area (38.2% - 50% Fibo retracement of 1.7042 - 1.6112), hit the top at 1.6686, which is exactly the 61.8% Fibo, and price still convincingly move inside the bullish channel. The bias remains bullish in nearest term but 61.8% Fibo is considered as good resistance so I will not surprise if we would have some downside corrections, testing 1.6575 area (50% Fibo). Break above 1.6686 area should trigger further bullish momentum targeting 1.6814 area (August 07 high).

USDJPY Outlook

The USDJPY made another moderate bearish momentum yesterday. On h4 chart below we can see that the new candle next to the inverted hammer failed to closed above 92.24 area indicating bullish reversal scenario failure and the price closed at 91.73. This bullish reversal failure could potentially lead the pair to further bearish pressure. Price is now traded below key support level 91.80 indicating potential bearish view. The bias is bearish in nearest term targeting 90.70 area. Break above 91.80 area should lead us back into no trading zone

USDCHF Outlook

The USDCHF attempted to push higher yesterday, topped at 1.0465 but further bullish correction was rejected as the pair closed lower at 1.0356. Is this mean the bullish correction is end and we ready to continue the bearish? Not necessarily. Take a look at my daily chart below, we have an inverted hammer which is also known as bullish reversal candlestick pattern. So, I prefer to stay away for now. I know many of us see the current bearish momentum as good opportunity to place short trades. Well, it is. But we also can't ignore a bullish correction warning. Just be patient, there are still a bunch of good trades opportunity.

EURJPY Outlook

The EURJPY had another indecisive movement yesterday. The pair attempted to push lower, bottomed at 133.29 but closed higher at 133.75. On h4 chart below we can see that this was a case of false breakdown from the range area. I still prefer a bullish scenario and a false breakdown usually lead to significant bullish momentum. However, I think it's better to stay out for now and wait for further development as the market seems to consolidate now. Immediate support at 133.29 (yesterday's low) and 132.80 area. Initial resistance remains at 134.50 Break above that area should trigger further bullish momentum at least towards 135.30. CCI in neutral area both on h4 and daily chart

GBPJPY Outlook

The GBPJPY had a moderate bullish momentum yesterday. On h4 chart below we can see that the bullish channel hold so far indicating bullish scenario remains intact. However CCI just cross the 100 line down on h4 chart suggesting potential downside pressure re-testing the bullish channel and 152.30 support area. Break below that area and a violation to the bullish channel should lead us into no trading zone. Immediate resistance at 153.30. Break above that area should trigger further bullish momentum testing 154.35

AUDUSD Outlook

The AUDUSD made indecisive movement yesterday, formed a Doji on daily chart. On h1 chart below we can see that the bullish channel has been violated to the downside indicating a paused of bullish momentum as the price consolidating in range area of 0% - 23.6% Fibo retracement of 0.8239 - 0.8665. The bias is neutral in nearest term, but I still prefer a bullish scenario. I will pay attention to support area at 0.8565 (23.6% Fibo). If price break below that area, we should see further bearish correction towards 0.8500 area, but if we see downside rejection after touch that support area, expect further bullish momentum back towards 0.8665 area. Break above that area should trigger further bullish momentum targeting 0.8730.

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Economic News

	EUR/USD	GBP/USD	USD/JPY	USD/CHF	AUD/USD	EUR/GBP
Daily Trend
Weekly Trend
Resistance	1.4660	1.6630	92.80	1.0475	0.8675	0.8890
	1.4630	1.6600	92.60	1.0450	0.8650	0.8855
	1.4600	1.6575	92.20	1.0425	0.8625	0.8830
Support	1.4550	1.6500	91.75	1.0350	0.8575	0.8775
	1.4500	1.6450	91.45	1.0325	0.8550	0.8750
	1.4450	1.6400	91.10	1.0300	0.8525	0.8720

USD - USD Down 3.7% against the EUR this Year

The Dollar Index traded near the weakest level in almost a year against the currencies of six major U.S. trading partners as record low borrowing costs encouraged investors to sell the greenback and buy higher-yielding assets. The index was at 77.002, after dropping yesterday as much as 0.7% to 76.803, the lowest level since Sept. 26, 2008.

The USD continues to suffer downward pressure as investors continue to anticipate that the global economy is emerging from recession, which makes them more willing to sell Dollars and invest in riskier currencies and commodities. At the same time, while the Fed's program helped pull the U.S out of the recession, it also pumped a lot of Dollars into the economy and with the continuous rise in the unemployment rate it is unlikely the Fed will raise interest rates any time soon.

Abundance of supply of USD, and a very low return on Dollar denominated assets due to the low interest rate, makes the greenback highly unappealing to investors; possibly replacing the JPY as the carry trade currency of choice.

The release of the Trade Balance and the Unemployment Claims figures is due to be released today at 12:30 GMT. With the unemployment numbers expected to show some improvement, a worse than expected result might help reverse some of the Dollar's recent losses.

EUR - EUR Maintains Momentum, Stays above $1.4500

The EUR has maintained its momentum Wednesday after breaking through its tight summer ranges on Tuesday, particularly the $1.4450 price level. The EUR continued to trade above $1.45 pushing briefly above $1.46; its highest level in more than nine months.

Late Wednesday, the EUR was at $1.4553 from $1.4499 late Tuesday. The EUR was at 134.02 Yen from 133.73 Yen. The U.K. Pound was at $1.6532 from $1.6499.

The EUR is benefiting from a belief that the Euro-Zone economy is improving at a higher pace than the U.S economy which lends support to the common currency. Furthermore, the EUR appears to be a popular choice as an alternative, higher yielding currency than the USD.

The U.K's MPC rate statement and Official Bank Rate is expected at 11:00 GMT. While the rate is not expected to change, the statement is highly important and is likely to have great affect on the GBP. Last month's surprise decision to increase the quantitative easing program set the GBP plummeting against its major currency counterparts. A similar announcement today could do the same.

JPY - Yen at Strongest Level in 7 Months against the USD

Japan's currency gained 0.8% against the Dollar, trading at 91.61; the highest level since Feb.17. The Yen declined 0.2% against the EUR, to 133.98 per EUR. The Yen's support arises from the fact that it is slowly being replaced by the Dollar as the preferred currency for carry trades.

However, as the Bank of Japan (BOJ) is hesitant about allowing the currency to appreciate without further substantial improvement in the economy, the Yen may have trouble's remaining at such a high level since there isn't much economic foundation behind this rise.

With no major news release from Japan today, the JPY's movements will likely be determined by news from the U.S and Europe.

Crude Oil - OPEC to Maintain Production Quotas

Crude Oil's price continues its advance for a fourth day with the contract for October delivery trading up 31 cents, or 0.4%, at $71.67 a barrel on the New York Mercantile Exchange (NYMEX) early morning trading today.

The advance was supported by OPEC's statement to keep oil production quotas unchanged on an expectation that the world economic recovery will keep prices near $71 a barrel. It seems that both consumers and producers are quite comfortable with the $65 to $75 price range. The drop in Dollar value also helped boost oil prices since Crude Oil, which is Dollar denominated, is now cheaper for holders of other currencies. Oil also serves as a protective investment against inflation caused by a weaker Dollar.

Today's release of Crude Oil Inventories is expected to show another drop of 1.5 million barrels, the third drop in four weeks. If results are better than expected we might see another boost for oil prices.

ENERGY MARKET RECAP

October Crude Oil closed up 0.85 at 72.16. This was 1.30 up from the low and 0.28 off the high.

October Heating Oil closed down 0.17 at 179.27. This was 2.67 up from the low and 1.71 off the high.

October RBOB Gasoline finished down 2.03 at 180.78, 3.22 off the high and 2.87 up from the low.

October Natural Gas finished up 0.44 at 3.27, 0.06 off the high and 0.53 up from the low.

Technical Outlook
CRUDE OIL (OCT) 09/11/2009: Stochastics are at mid-range but trending higher, which should reinforce a move higher if resistance levels are taken out. The close above the 9-day moving average is a positive short-term indicator for trend. The market has a slightly positive tilt with the close over the swing pivot. The near-term upside objective is at 73.48. The next area of resistance is around 72.94 and 73.48, while 1st support hits today at 71.36 and below there at 70.32.

RBOB GAS (OCT) 09/11/2009: Stochastics are at mid-range but trending higher, which should reinforce a move higher if resistance levels are taken out. A negative signal for trend short-term was given on a close under the 9-bar moving average. The close below the 1st swing support could weigh on the market. The next upside objective is 186.98. The next area of resistance is around 183.87 and 186.98, while 1st support hits today at 177.79 and below there at 174.81.

HEATING OIL (OCT) 09/11/2009: Daily momentum studies are on the rise from low
levels and should accelerate a move higher on a push through the 1st swing resistance. The close above the 9-day moving average is a positive short-term indicator for trend. The market tilt is slightly negative with the close under the pivot. The next upside target is 183.41. The next area of resistance is around 181.47 and 183.41, while 1st support hits today at 177.09 and below there at 174.66.

COPPER MARKET RECAP

December Copper closed down 4.75 at 287.65. This was 4.40 up from the low and 0.55 off the high.

Technical Outlook
COMEX COPPER (DEC) 09/11/2009: Momentum studies are trending higher from id-range, which should support a move higher if resistance levels are penetrated. The market's short-term trend is negative as the close remains below the 9-day moving average. The market setup is somewhat negative with the close under the 1st swing support. The near-term upside objective is at 300.87. The next area of resistance is around 293.70 and 300.87, while 1st support hits today at 281.30 and below there at 276.08.

PRECIOUS METALS RECAP

December Gold closed down 0.3 at 996.8. This was 11.8 up from the low and 2.8 off the high.

December Silver finished up 0.2 at 16.67, 0.05 off the high and 0.475 up from the low.

Technical Outlook

COMEX SILVER (DEC) 09/11/2009: Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. A positive signal for trend short-term was given on a close over the 9-bar moving average. The daily closing price reversal up is a positive indicator that could support higher prices.
The market has a slightly positive tilt with the close over the swing pivot. The next upside target is 1721.0. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 1704.0 and 1721.0, while 1st support hits today at 1638.0 and below there at 1589.0.

COMEX GOLD (DEC) 09/11/2009: Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. A positive signal for trend short-term was given on a close over the 9-bar moving average. The daily closing price reversal up on the daily chart is somewhat positive. It is a mildly bullish indicator that the market closed over the pivot swing number. The near-term upside target is at 1012.3. The 9-day RSI over 70 indicates the market is approaching overbought levels. The next area of resistance is around 1006.8 and 1012.3, while 1st support hits today at 989.6 and below there at 977.8.

CURRENCY MARKET RECAP

September US Dollar closed down 0.275 at 76.825. This was 0.115 up from the low and 0.405 off the high.

September Euro closed up 0.43 at 145.86. This was 0.83 up from the low and 0.28 off the high.

September Japanese Yen finished up 0.53 at 109.03, 0.35 off the high and 0.65 up from the low.

September Swiss finished up 0.38 at 96.34, 0.2 off the high and 0.8 up from the low.

September Canadian Dollar finished up 0.25 at 92.75, 0.05 off the high and 0.86 up from the low.

September British Pound closed up 1.36 at 166.67. This was 1.86 up from the low and 0.21 off the high.

Technical Outlook
JAPANESE YEN (SEP) 09/11/2009: The crossover up in the daily stochastics is a bullish signal. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. A positive signal for trend short-term was given on a close over the 9-bar moving average. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next upside objective is 109.95. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 109.52 and 109.95, while 1st support hits today at 108.53 and below there at 107.96.

EURO (SEP) 09/11/2009: Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. A positive signal for trend short-term was given on a close over the 9-bar moving average. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The near-term upside target is at 146.83. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 146.42 and 146.83, while 1st support hits today at 145.32 and below there at 144.62.

STOCK INDICES RECAP

December S&P closed up 9.4 at 1037.5. This was 14.3 up from the low and 1.8 off
the high. December S&P E-Mini finished up 9.25 at 1037.25, 2.25 off the high and
14.25 up from the low.

December Dow finished up 61 at 9540, 30 off the high and 92 up from the low.

Technical Outlook
S&P 500 (DEC) 09/11/2009: The moving average crossover down (9 below 18) indicates a possible developing short-term downtrend. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The market's close above the 9-day moving average suggests the short-term trend remains positive. With the close over the 1st swing resistance number, the market is in a moderately positive position. The next upside objective is 1050.47. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 1045.55 and 1050.47, while 1st support hits today at 1029.45 and below
there at 1018.28.

S&P E-MINI (DEC) 09/11/2009: The moving average crossover down (9 below 18) indicates a possible developing short-term downtrend. Momentum studies are trending higher but have entered overbought levels. The market's short-term trend is positive on the close above the 9-day moving average. With the close over the 1st swing resistance number, the market is in a moderately positive position. The near-term upside target is at 1050.75. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 1045.50 and 1050.75, while 1st support hits today at 1029.00 and below there at 1017.75.

NASDAQ (DEC) 09/11/2009: Rising stochastics at overbought levels warrant some caution for bulls. The market's close above the 9-day moving average suggests the short-term trend remains positive. Market positioning is positive with the close over the 1st swing resistance. The next upside objective is 1701.25. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 1694.50 and 1701.25, while 1st support hits today at 1671.50 and below there at 1655.25.

DOW (DEC) 09/11/2009: A new contract high was made on the rally. The downside crossover of the 9 and 18 bar moving average is a negative signal. Momentum studies are trending higher but have entered overbought levels. The market's short-term trend is positive on the close above the 9-day moving average. It is a mildly bullish indicator that the market closed over the pivot swing number. The next upside objective is 9559. The next area of resistance is around 9521 and 9559,while 1st support hits today at 9449 and below there at 9416.

BOND MARKET RECAP

December Bonds finished up 2-010 at 120-120, 0-010 off the high and 1-310 up from the low.

December 10 Yr Treasury Notes closed up 0-310 at 117-290. This was 0-255 up from the low and 0-025 off the high.

Technical Outlook
BONDS (DEC) 09/11/2009: Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The intermediate trend could be turning up with the close back above the 18-day moving average. Since the close was above the 2nd swing resistance number, the market's posture is bullish and could see more upside follow-through early in the session. The next downside objective is 117-080. The next area of resistance is around 121-070 and 122-010, while 1st support hits today at 118-270 and below there at 117-080.

10 YR TREASURY NOTES (DEC) 09/11/2009: Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The close above the 9-day moving average is a positive short-term indicator for trend. The market's close above the 2nd swing resistance number is a bullish indication. The next downside target is 116-130. The next area of resistance is around 118-130 and 118-255, while 1st support hits today at 117-070 and below there at 116-130.