August 8th, 2008 will be known for two events: the start of the 2008 Beijing Olympics and the massive, bullish breakout for the US dollar. The currency made its move across the board, taking out significant technical (and psychological) levels against most of its major counterparts and marking its biggest one-day advance on a trade-weighted basis in over five years.
Following the Fed and ECB monetary policy meetings, traders have been aggressively buying EURUSD, according to the FXCM SSI, a proprietary indicator that tracks the positioning of more than 30.000 traders. Yet, in the past, the SSI has been working better as a contrarian indicator.
A trader's psychology that attends massive market movements is usually one of disgust for having missed out on the move. However, there is plenty of USD upside left and there will be countertrend movements along the way (markets are not linear). We'll identify the completion of these corrections as they unfold.
Wave structure and the break of a major trendline indicate that the GBPUSD has entered into a long term decline. This week, we’ll look at long term and short term bearish targets as well as potential resistance levels for next week.
Currency trading signals on DailyFX+ have been expanded to our newest offering: interactive system trading alerts that update on a dynamic basis. Our exciting new product is exclusively available to FXCM clients and increases the value-added of our enhanced DailyFX+ website. The following DailyFX.com report has been designed to advise when we may expect specific strategies to perform better than others and provide general guidelines to using these trading signals.
Currency Strategist
After a wave of top economic event risk, the US dollar has come through this past week with a more promising outlook for growth as well as diminished potential for a Fed rate hike this year. After the policy board announced its intentions to hold the benchmark lending rate at 2.00 percent and offered rhetoric that was more or less in line with the group’s middle-of-the-road commentary from previous months’ statements, the probability that the central bank would raise rates by the end of the year dropped from 71.6 percent to 59.9 percent.