Dollar slightly lower ahead of expected rate cuts

Thu, Mar 5, 2009

Two interest rate announcementsÂ will take placeÂ today,

First , at 12:00 GMT the Bank of England (BOE) is expected to slash rates by half precent on the Pound, from 1.00% to 0.5%

a bit later, at 12:45, the European Central Bank in also expected to cut rates by half percent, from 2.00% to 1.500%

The market is anticipating this action, and has already priced-in some of the move.

We can see EURUSD,Â GBPUSD and AUDUSD trading higher this morning, with the pound holding on very well against the dollar every time sellers try to push it towards 1.4 . A clear break under andÂ a weekly closeÂ on levels lower than 1.395 could indicate that this important support level was finally breached, and a further decline to the next support around 1.36 is in the cards. On the upside for the pound, first resistance area would be 1.4380, with a clear break above signaling the end of the current down correction.

EURUSD, after creating new lows this week, had a temporary correctionÂ above 1.26Â Â this pair is trading in the bottom of its range , thus so far buyers where willing to enter every time the market was moving towards 1.25 or lower.
This is the way EURUSD is behaving just before its about to chose a side and go for it, so be on the alert when it is either crossing well under 1.245 or well above 1.2666.

USDJPY: is getting closer and closer to 100, i wouldn’t recommend any trade on this pair at the moment.
On one hand, traders are still dumping the Yen in favor of the dollar moving the pair higher, on the other, USDJPY had advanced too far up with no technicalÂ correction move.

Z.Georgi