Rethink Foreign Exchange

Scheduled event risk and the considerable possibility of unforeseen risk threaten high volatility next week - unfavorable conditions for finding range trades. However, there are still a few pairs with strong technicals that could avoid next week?s FOMC rate decision and have a limited response to another wave of risk aversion should credit markets seizure again.

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S&P500..1288.79…The 1326 level continues to provide fairly good resistance and thus, the ST trend on the daily chart remains down despite the fact that it has lost part of its downside momentum. Thus, as long as the said resistance remains intact, we continue to expect a decline twd our downside target at 1255 and probably even to the 1227/1211 area. On the downside, a firm and sustained break abv 1326 (say, a close abv that level, or an intra-day move abv 1333) will signal that a ST

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- EUR/USD hits fresh record high, carry trades falter as Fed, JP Morgan act to bail out Bear Stearns - USD/JPY breaks below key 100 level - will the Bank of Japan intervene? If so, when?

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Nasdaq100…1716.44…The ST downtrend from the late December 2007 top remains intact though the downside momentum has obviously weakend. It is clear however that as long as the market stays below the 1771 level, the downside pressure remains and we still expect weakness twd 1654 and possibly twd the 1601 level before a more solid bottom is found. On the upside, a move abv 1771 will signal that a ST low is possibly in place and will suggest gains twd 1824 initially. We will keep to

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If you think the cost of gassing up your car is outrageous, wait until you need to restock your pantry. The price of wheat has more than tripled during the past 10 months, making Americans’ daily bread — and bagels and pizza and pasta — feel a little like luxury items.

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Action Insight Weekly Review and Outlook Another Record Week for Dollar, No Sign of Bottom Yet It was another record breaking week with EUR/USD scoring new record high of 1.5687. More importantly, violent moves in the market pushed some pairs through important long term levels. USD/CHF took out parity for the first time in life. USD/JPY broke 100 psychological for the first time since 1995. GBP/JPY also broke 200 psychological level. Fed’s new Term Securities Lending Facility might have

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Listen to our Evening DailyFX Forex Radio PodCast: http://media.dailyfx.com/podcasts/FXRadioPM031408.mp3

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US Retail Sales on tap today, but market more focused on risk theme again on hedge fund failure news. MAJOR HEADLINES ? PREVIOUS SESSION Overnight developments: New Zealand Feb. Business PMI out at 52.2 vs. 53.2 in Jan. New Zealand Jan. ex-Auto Retail Sales out at +0.3% vs. +0.1% expected Australia Feb. Employment Change rose +36.7k vs. 15.0k xpected Australia Feb. Unemployment Rate fell to 4.0% vs. 4.2% expected and 4.1% in Jan. THEMES TO WATCH ? UPCOMING SESSION Key event risks today (all

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The Euro continues to advance higher versus the U.S. dollar setting fresh record highs constantly. The overall sentiments on the greenback remains extremely weak with EURUSD scoring new record highs above the 1.56 mark. With such strong momentum on the Euro we won’t even get used to writing “1.5xx” until the pair will be already into the 1.6 zone. The downside risk is high at current levels due to potential Central Banks interventions but while uptrend is intact, any retracements would be

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USD/JPY at 13-Year Low Following Thursday?s disappointing retail sales and continued credit-market worries, the greenback hit the lowest level since 1995 versus the yen and touched record lows against the euro and Swiss franc. News about severe credit problems at Carlyle Capital and Bear Stearns increased risk aversion. The FX market awaits Friday?s US CPI and sentiment data. The USD/JPY, falling to a 13-year low, traded below the important 100 overnight but recovered somewhat as US stocks

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