Economic News
 
USD

Last week's trading session ended on a tremendous high note for the greenback as it steadily gained against 14 of the 16 major currency pairs. As economic data continued to surprise forecasters, the dollar gained on its major counterparts, going so far as to post record gains, not seen since late 2004 against the EUR. When trading came to a close on Friday, the dollar found itself under the 1.45 support level, a level most thought was far from being reached.

The unexpected positive results originated from a host of US economic data begining early last week, ahead of the Tuesday December 11th interest rate cuts by the Federal Reserve. Most were convinced that the rate cuts would be the driving force in amending dollar positions, instead the change began on Thursday December 13th, as a wide range of Retail and PPI numbers were released far and above the anticipated marks. The dollar then began its move, gaining on the GBP, CHF, JPY and EUR especially, posting its biggest single day rally since spring 2005. Inflationary concerns also spurred on the bullish dollar behavior.

There were several moves within the private sector that allowed for a boost in the greenback as Lufthansa, the German airline giant bought a significant stake of US budget airline JetBlue. Friday, than followed with surprisingly positive Consumer Price Indices and Industrial numbers, allowing the dollar to post its record gains. As consumer purchasing power is high now during the holiday season, and continues to contribute to sales within US businesses, many awaited a possible correction of prices upon return to the new week of trading. However, Sunday night saw the dollar correcting below the 1.44 level to return to trading at 143.89, extending the growing possibility that a correction might be further off than expected.

This week's economic calendar is rich with US news, which has suddenly become even more intriguing. Housing Starts, GDP figures, Unemployment Claims and Personal Spending figures are to be released. Today, we will see the early afternoon (GMT) publication of TIC Net Long-Term Transactions and the Empire State Business Conditions Index. It will be wise to watch if and when the greenback reverts back to its latest spell of mediocrity.

EUR

The Euro found itself in a precarious position at week's end, as the dollar achieved significant growth, shattering the 1.45 support level. Euro-zone data regarding consumer prices and growth came back higher than initially expected and still was not able to combat the dollar's ttireless push toward record high rallies. The big difference between the two currencies is the importance which the ECB gives to certain economic figures that are considered the less significant in the Federal Reserve's mind. The attention paid toward headline prices versus that of core prices is what has made the ECB stand out in past months

Economic figures have all been on target, and generally positive from the Euro-zone, which leads some to believe that most of the movement will once again fall on the greenback and its surrounding data.

The German IFO report, Euro-zone PMI, Trade Balance and Production Prices are the key economic events on this week's calendar. Still though, how much will these reports affect the outlook of the Euro currency pairs, especially versus the greenback? As we saw towards the end of last week, the hawkish economic mentality regarding the 13-nation currency has prevented it from reflecting any of its inspiring economic data. Expectations are that all the aforementioned data will return positively, and still skepticism regarding dollar strength can be felt.  

 
JPY

Japanese stocks fell for the fourth straight session on Monday, tracing falls on Wall Street after fresh data pointed to a surge in U.S. inflation, on concern accelerating inflation in the U.S. and Europe will curb spending and limit further interest-rate cuts. Against the JPY, the USD rose 1.1%to 113.46, after rising to a five-week peak at 113.59. Also yesterday, Japan's tertiary index, which measures spending in the services sector, rose 1.1% in October from the previous month as the cold weather buoyed spending on winter clothing, according to a Ministry of Economy report.

In the week ahead, the Japanese economic calendar is ostensibly busy, while the markets have shown few noteworthy reactions to the JPY economic data. A December 20th Bank of Japan interest rate announcement could prove to be the exception to the rule. The bank is very widely expected to leave rates unchanged at 0.50%, but any noteworthy shift in rhetoric could potentially spark JPY volatility.  

Technical News
 
EUR/USD

The pair is deep in the bearish trend that was initiated at the end of November, and shows no sign of a cool down. The momentum in the 4 hour chart is strong, and the slow stochastic is pointing at another bearish burst quite soon. 1.4350 appears to be next target price.

GBP/USD

The cable is heading back to the 2.0000 level with full energy, creating a very impressive channel on the daily chart. The next significant key level will be 2.1000, as a break through that level will validate the next move that will probably end the 2 USD per Pound, at least for the short run.

USD/JPY

After the bearish channel on the daily chart was breached, it unleashed a strong bullish move, as the pair now floats around 113.00. Range trading within the new bullish channel is expected to dominate, and a breach through 114.05 will validate a stronger bullish move.  

USD/CHF

The pair is still in the bullish trend which started at 1.0900, and appears to be heading to the 1.1700 level at full throttle. All daily oscillators are pointing north, and are support by very bullish hourly studies. A breach through 1.1505 will validate the move to 1.1700.


The Wild Card

Gold

There is a very distinct bullish flag pattern on the daily chart, as Gold now floats around 793.00 which is the bottom barrier of the flag. If a breach will not occur at this level, it will strengthen the notion that the flag is indeed valid, which will create a great opportunity for Forex traders to enjoy the break of the bullish move.