USD weak vs. Euro & British Pound

With the relative declining volumes in line with the volatility index and not to mention the most recent report on the retail sales decline have given the market investors a negative view of the US dollar and its economic recovery. In the coming few days where the Producer Price Index and the Consumer Price Index not make much of the difference while the Federal Reserve would also keep rates at its lowest levels just to try to support and perk up economic growth.

The market's reaction towards the Currency market specially for the EURUSD and the GBPUSD was more of the US Dollar's weakness and not the strength of the Euro nor the Pound. Yet as of this writing based on our market view report the EURUSD has made some pace setting effort to move higher by reaching 1.2777 from the low of 1.2522. Where we have indicated that a 1.2510 level would be an ideal entry price as the USDX have maintained its lower direction back to the low of 83.38 basis point. With that said , the GBPUSD also reached a 1.5295 well within our range objective set in the market view analysis dated the 12th of July which was earlier based on the market's signals of July 7th 2010.

Meanwhile, the weakness of the USDCHF has indeed been more anticipated as the 1.0530 really looks weak as the USDX trends lower for the rest of the week. Although, some hope for any positive outcome from the reports may well be ignored by the overwhelming sentiments currently existing in the market. With sticks now on the lower price segment, a flight to quality may also be dampened as most investors have shifted funds to more attractive arbitrary hedging strategies of the Australian and New Zealand Dollars with a better rate of return on its rates. Some carry trades may soon emerge as this continues towards the middle of the weeks ahead as foreseen by analyst that a declining US dollar would continue to hold.

As of this writing, the AUDUSD has reached a high of 0.8870 from our average price of 0.8350 which translates to a positive trade from the earlier position together with the Kiwi at the 0.7101-17 levels and currently working at the 0.7208. A momentum indicator have made some signals that increasing volumes for both pairs are keeping pace with the price movements.

Please keep watch for the reports coming out for the week! There are some surprises along the way while trading the FX market. With low volatility some major players may consider taking advantage of the retail investors as it has always been the case for some.

Good luck and the best for your trades!