Greenback Bull Traders never give up, do they?

A lack of substantial economic data and an abundance of geopolitical turmoil sent the Euro lower during the Asian session and into the early European session. The escalation of tensions in the Middle East between Lebanon and Israel drove up the price of crude oil over $78 a barrel, creating especially choppy conditions for the European currency. Italian CPI data fell in line with expectations at 0.1% in June while the annual rate remained at 2.3%. New car registrations declined 4.1% in June from May’s 9.6% increase, as rises in gasoline prices kept drivers away from the road. Euro-zone data on the agenda for next week includes CPI, industrial production, trade balance, and the ZEW economic survey, which is sure to give some insight into how the European Central Bank will act when they meet on August 3rd. As of 8:38 GMT, the EUR/USD trades at 1.2667, down from Thursday’s New York close of 1.2688. The decline is looking rather tired on the hourly chart as evidenced by bullish divergence among oscillators and price. Still, the possibility does remain that EUR/USD slips a bit lower to test the 61.8% fibonacci retracement of 1.2481-1.2859 at 1.2625. Additional support would be at the 78.6% fibonacci line at 1.2562. If the reversal scenario plays out, then resistance is at a resisting trendline near 1.2700 with a break higher exposing yesterday’s high at 1.2730. Also, this next leg up would be a 3rd wave rally – which is often fast and furious. An impulsive move higher could stall at the confluence of the 61.8% fibo of 1.2859-1.2647 / 7/12 high at 1.2777/79.

For the dollar, consumers continued to curtail their spending last month as rising gasoline prices dampened purchases of other goods, a fresh indication of a cooling economy. The cutback unexpectedly pushed retail sales to -0.1% after edging up by the same amount in May and Retail Sales Excluding gasoline sales, June retail sales was reported with a -0.2%. Escalating violence in the Middle East, with Israel widening its offensive in Lebanon on Friday, carried oil to a new high of more than $78 a barrel in European markets amid concerns over possible supply disruptions. Concerns from a survey from the University Of Michigan Consumer Confidence eased to 83.0 in July versus 84.9 in the previous month. Economists' consensus were 85.0. This is a fact that we know high gasoline prices and interest rates are causing consumers to restrict their spending for the 'rainy' days to come...

For some of my readers, you might've been noticed that I've been quite negative on USD... in fact quite a lot. I have my reasons why and I'm going to state it now today and I apologize for the skip in updating my blog yesterday.

Here are my reasons,

Firstly, according to the fundamentals collected through this months, it's so certain that the economic growth in the US is definately slowing. Despite that, interest rates has not failed to pause even it was expecting back in April when Fed Reserve Chairman Ben Bernanke speaks. 3 months passed and no pause is sighted. So as the current view of it, the US economy is starting to bleed, how bad it would be will left to be seen in future as I've mentioned before, an interest rate hike doesn't take effect immediately on the next month after the hike, but mostly results will only be seen after 6 months and furthermore, we're judging the inflationary data based on previous month's performance... I'm seeing the Fed to definately overshoot if the interest rates reached 5.50% in July. As another reason of why I see things differently from the market last Friday as Non-Farm Payroll reports were much much lower below the consensus and Average hourly earnings was higher than expected, I have my own analysis for that. NFP fell, unemployment increases... which indirectly means small/medium sized company are not hiring more staff to minimize expenses, so with the limited staff in the workplace and more work to be done (e.g. 1 man has to do 2 person's job, get the idea?) and the employer would gladly increase your salary/earnings by a minimal percentage as an encouragement or motivation just to make you do more work... just that simple. As for the retail sales today, I've made my analysis the previous day but failed to paste it here but here it goes... Companies refuse to employ and those who're still employed (they lucky ones...) had their earning's increased, good news for the economy and the dollar? Think again. If I am the lucky employee that happens to be still employed, and got my earnings increased, I would definately NOT increase my spending expenditure and probably cut them more than usual. Why? I see unemployment rising, high interest rates and probably higher weeks ahead, times are hard and I would definately want to save more money for tougher times ahead. How could the retail sales not dropped as people refuse to spend more? And just for information, retails sales contribute to 2/3 of consumer spending in the country. So how good could it be for the US economy then...

If you have your own analysis, I would be more than happy to hear from you and it would be great to exchange ideas as I'm still a newbie in this world. You could contact me at gohrayson@yahoo.com through email or Yahoo Messenger.

I've not made a single new trade for the whole week for my live account and I'm still hedging using USD/CHF and EUR/USD. I tried to break some rules today by placing a trade for gold at $666.00. Unfortunately, it was there and I ran out of margin to place a new trade. What a luck... My demo account has been more than terrible as I've went in the EUR/USD at the wrong price and scalping the market needs incredible precision in price marking. That one mistake caused me $100 grand. I'm looking forward to make a significant recovery on my demo account next week as more Euro data will be released that will influence the ECB on interest rate hike on August 8th.

Gold rose to a six-week high as investors bought the metal as a haven and a hedge against inflation, after escalating violence in the Middle East pushed crude oil to a record. Gold has jumped 8.4 percent this month, after falling in May and June, as bombings in India and North Korea's missile tests led to increased demand for the precious metal. Gold and Treasuries rallied and global equity markets declined as investors sought safety for their money. Israel's air force struck targets in Lebanon for a third day. I'm expecting gold to linger around 660 zone for a while in Monday before it takes another big leg up. I see the precious metal getting stronger everyday and makes me regretting that I should've taken the XAU/USD trade at 630 level back then and I had sufficient margin to make that trade then. Hopes I would be in a better position next week.