Daily FX Wrap Up

Over the past few months, the vast majority of entries to this blog have focused on the US Dollar’s decline and subsequent rebound against its major counterpart, the Euro. One of my resolutions for the New Year was to broaden my scope to look beyond the Dollar, and although today is the first opportunity of 2007 to enact this new policy, I am sad to report that this segment will not accomplish that goal. This is due in large part to the fact that the US Dollar gapped open from last week’s close thanks to the combined effects of the long holiday weekend and the National Day of Morning for former President Gerald Ford on Tuesday.

The EUR/USD pair rose to a five-month high of 1.3291, after an initial 125-pip rally in the early morning session. It is important to remember that the major players (US Banks, most notably) were not open and therefore did not impose their typically huge sway on the market. The rest of the trading week features a healthy dose of news, including the FOMC Minutes, Non-Farm Payroll, and Initial Claims Reports. If these releases are favorable for the US Dollar, it might make the EUR/USD a short-term bear market. This week will be a great opportunity for monitoring the EUR/USD pair for one of two possibilities – a correction from a gapping market, or the continuation of a solid bullish Euro trend. XPRESSTRADE Analyst David Hilgeman