Yesterday was Thanksgiving holiday and the US dollar came under constant pressure,bouncing off another record low against the EUR touching...

... the 1.4872 mark.

It is still believed by many forex traders and major banks, that problems to U.S. economic
growth still exists and more Americans are forecasted to suffer from the credit and
the mortgage crisis. US housing crisis still remains the source of recent troubles
with US development and therefore consequently the dollar is less preferential at
this stage against other major currencies. The Greenback has not passed the pain
barrier just yet and it is forecasted to suffer further collapses. At the heart of
the dollar's weakness is the outlook of a weakening US economy mainly influenced by
the subprime crises still being felt just as inflation concerns are rising to the
surface, which is chiefly influenced by the resent elevated oil prices. In addition,
the last fall in weekly mortgage requests, symbols a stress in the labor market.
The labor market shows signs of minor advance. We noticed, on the basis of data,
which was published on Wednesday that the number of U.S. workers filing initial
claims for jobless benefits was reported to have fallen by 11,000 in the week ended
November 17, in line with expectations, but still the market was not very optimistic
regarding this result. The U.S. currency undermined for a fifth day against the 13
nation currency. Losses from U.S. subprime-mortgage, attached with slowing economic
growth and falling house prices, could rise to as much as $300 billion, the
Organization for Economic Cooperation and Development said yesterday in a statement
released in Paris, and as it stands, the Federal Reserve will cut interest rates to
stop subprime-mortgage losses pushing the U.S. economy into recession. Therefore the
outlook for the greenback still remains very bleak and we will see dollar continue
to slide to new record lows against the EUR. The U.S currency is unlikely to reverse
in the near future as many analysts believe that a weak dollar is in the Fed's
interest and that they are purposefully devaluating the currency, so until there is
a change in attitude by the Fed there should not be any noticeable reversal.


* EUR

Yesterday during the holiday trading the EUR stroked a new record high against the
U.S. dollar and has reached the level of 1.4873 per US dollar. The 13 nation
currency, the Cable and other currencies have been climbing steadily against the
dollar since August on the back of fears of the state of the U.S. economy and these
fears strengthened by the subprime credit crisis.
The US dollar has been further weakened by U.S. interest-rate cuts -- which can be
used to jump-start an economy but can also weaken a currency as investors transfer
funds to countries where they can earn higher returns. The Federal Reserve has
already cut rates twice.
Yesterday the 13 nation currency increased and got stronger against the US dollar on
the basis of different assumptions of the European Central Bank policy makers
regarding the future steps which will be taken in order to deal with the issues of
inflation; which probably will accelerate during the short term, and will create the
need for the central bank to resume raising interest rates.
Europe's single currency also rose against the yen after the yield premium investors
earn on 10-year German bunds over similar-maturity Japanese government bonds
increased to 2.60 percentage points yesterday.

In other news yesterday, UK data out showed a sharp slow down in business
investment, darkening the outlook for the overall economy. The data kept pressure on
the pound which is now close to its lowest against the EUR since May 2003.


* JPY
Today Japanese financial markets were closed for the Labor Thanksgiving Day holiday
and therefore trading volumes were slightly below average.
Yesterday since the early trading hours the Japanese currency strengthened against
all 16 most-actively traded currencies including the South African rand and
Australian dollar, The Japanese yen strengthened as investors avoided so- called
carry trades. A strong yen hurts Japan's exporters by grinding down their
foreign-earned income.
Today, the dollar fell below 108 per Japanese yen for the first time since 2005.
During the early trading hours in Asia, The yen climbed to 107.69 per dollar, the
highest since June 10, 2005. It also was at 160.92 versus the EUR from 161.07
yesterday and 162.86 on Nov. 16.
The Nikkei 225 Stock Average rose 0.3 percent, erasing a loss of 1.1 percent. The
Nikkei had a correlation of 0.95 with the dollar against the yen in the past month.
A reading of 1 would mean the dollar and the index moved in lockstep. As global
equity markets continue there bearish trend and currency volatility remains the name
of the game, the JPY should continue its bullish rampage.


Technical News
* EUR/USD
The 4 H and the daily chart indicate that the current strong bullish trend is not
out of steam yet as the long term Moving Average (Weighted 21) crossed by a bullish
bar. Additionally the ADX (Average Directional Movement) also strengthens our
opinion while the DI+ is on its way to crossing the DI- from below which is
considered a bullish signal. Going long seems to be preferable and a longer term
strategy by buying on a correction or a dip will be optimal .


* GBP/USD
The cable rose sharply yesterday and breached well beyond the key 2.0750 level.
However it has been unable to maintain its bullish momentum. Indicators on the 4 H
chart are fairly neutral but the daily chart is slightly bearish, so traders should
exercise caution today.


* USD/JPY
There is a fairly wide bearish channel appearing on the 4 H chart indicating that
there is still room to maneuver downwards. Bollinger bands are widened indicating
increased volatility. This pair is now likely to target the 107.00 level.


* USD/CHF
After bottoming at 1.0890 the pair has corrected a bit and is now trading at 1.0935.
However a strong bearish configuration is forming on the 4 hour chart and the
hourlies are showing that there is a clear bearish trend. Therefore today this pair
should again breach the 1.0900 level. However the EMA has been swinging recently
between the 50 and 100 levels, indicating the possibility of range trading today.


The Wild Card
* Crude Oil
Oil has eased off slightly after reaching unbelievable all time highs but it still
showing very positive momentum. Both daily and hourly charts are demonstrating
robust bullish oscillators. This is a good opportunity for
Forex traders to catch the resumption of the bullish rampage that oil has been on
in recent weeks.

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