USD The USD hit fresh 26 year lows against the British pound, 24 year lows against the New Zealand dollar and 2.5 year lows against the Euro before recovering. The recovery however was shallow as the EUR/USD, GBP/USD and NZD/USD all ended up back in positive territory. This might be a reflection of the market's distaste for the US dollar or their pessimism about the outlook for the US economy. There is also the threat from the US mortgage market which is facing a possible collapse. Currency traders refuse to give up on carry trades and the major intraday reversals in USD/JPY and NZD/JPY are evidence of that. The weakness in the USD is helping to make US stocks a good value for foreign investors. We expect the Treasury's reports on net foreign purchases of US securities to be strong in the next few months as the demand for both US stocks and bonds remain robust. Looking ahead we are expecting leading indicators, jobless claims and the Philly Fed report. The rise in the stock market should help to boost leading indicators while jobless claims, are predicted to have dropped last week after the prior week's sharp surge. This makes the Philly Fed survey the event risk for the day. Even though the Empire State manufacturing survey rebounded far less than expected, the forecasts for the rebound in the Philly Fed survey is already very modest, which means that it may not be hard for the data to surprise to the upside. At this period of time it seems that only a calling home of US troops in Iraq could revert the USD bearish trend. EUR The EUR traded near record highs against the USD, as further prospects of monetary tightening by the EU emanated. The Euro broke through key levels of 1.3600 for the first time in 2 years almost reaching record highs reached in December 2004. Overall the Euro traded with a range of a low 1.3557 and a high of 1.3617 before closing the day at 1.3579 by the end of the New York session. With no major data on the Euro zone calendar, the latest push has been sparked by the hawkish commentary from the European Central Bank officials. ECB member Weber was the latest to remind the markets of upside inflation risk by saying that the rebound in the Euro zone economy will push wages and overall inflation higher. ECB member Ordonez noted that interest rates remain accommodative while the head of the Luxembourg Central Bank said flat out that he sees higher interests this year. From every angle, the ECB needs to raise interest rates and they believe in it and so does the market. Therefore , the EUR has the fundamental support to hit fresh all-time highs. German producer prices and Italian industrial orders are due for release today. Both are expected to reflect an overall rebound in the Eurozone economy. We are also expecting the ZEW survey for Switzerland. The strength of recent economic data should help to boost overall sentiment. JPY The JPY crosses opened the US session sharply lower after EU Junker expressed criticism for one-way bets in the currency market. however we witnessed the JPY rebounding during the night session despite the recent trends in Carry trades, which may indicate some rebalancing of risky trades. Europeans are beginning to express their dissatisfaction with the recent weakness in the JPY but until the US becomes concerned, it is unlikely that currency traders will care. Expect the recent weakness in the JPY to have a profound impact on the earnings of Japanese exporters. In addition the Nikkei dropped 208 points in the Asian session, due to the JPY reversal. Looking ahead, we continue to only have secondary data from Japan. The tertiary industry index for the month of February came 1.4% stronger then expected and help boosting the JPY all over the board, traders should expect the continuation of JPY rebound today. EUR/USD – The 4 hour indicators support a slow upside slide, as the slow stochastic is at 70 and pushing higher. However a strong resistance at 1.3620 is still holding and not likely to be breached today. Actually we are likely to see a mild bearish reversal from this pair before trying to reach a new all time high. GBP/USD – A bearish reversal wave is taking this pair downwards trying to break the next support level at 2.0000 if this level will break today we will see the rebound continue towards 1.9900, however long term indicators support a possible new all time high for this pair. USD/JPY – The bearish reversal back from 119.86 high 2 days ago has taken this pair back to 117.74 and pushing even lower trying to test the 117.40 support level. All indicators are extremely bearish as 4 hour slow stochastic at 20 and momentum at 97.7 with much more room for the downside. USD/CHF – This pair has tipped 1.2001 yesterday and a strong support has been formed at this price level. However indicators are still bearish where 4 hour stochastic is at 20 and momentum is at 99.08 and will try to pull the price back to the 1.19 level once more. Wild Card – GBP/JPY – Forex traders be aware this pair has started the second bearish day and there is still a long way downwards, as 4 hour slow stochastic is at 20 facing downwards and the lower band of the Bollinger has breached next support level is at 234.20.