Mixed Market With Confused Market.

This week started off somewhat in a interesting manner with traders of bulls and bears are dumping yards of cash into the market. For USD bears like yours truly, I'm still holding on my trades from last friday as hopes of interest rate hike expectations from the Federal Reserve are slowly fading and the major lot of economists and traders are pricing in the hike pause on the FOMC meeting next week. For the dollar bulls traders, they are somehow hoping for a miracle that the Fed will raise interest rates next week, not to mention that the chances are dim now but even with a rate hike, it will be a last one and from my anaylsis, it's gonna be bearish USD as well. Not a doubt for me.EUR USD is currently challenging a declining rendline drawn off the June high. The interesting feature in the coming sessions will be whether the bulls are able to lift the pair above this resistance at US$ 1.2785. As long as the pair trades below this line, the intervening peaks will show a descending tendency.

From the Eurozone today, as expected, Monthly German Retail Sales in June rose to 1.9% vs. -0.4% in May. The consensus was 1%. The rise was the biggest since January and came after May's 0.4% fall. But the year-on-year figure showed a 0.4% drop. Frankly speaking, I was expecting a higher than consensus number as June, is the starting of the World Cup 2006, and it's in Germany. If the retail sales fell, someone please contact the Internal Affairs or the anti-corruption unit or whatever because there's definately some corruption within the government. Europeans' confidence in the economy unexpectedly rose to the highest in more than five years in July and inflation ran at the fastest clip since October, strengthening the argument for the European Central Bank to increase interest rates this week. An index of sentiment among executives and consumers in the dozen euro nations increased to 107.7, the highest since March 2001, from a revised 107.1 in June, the European Commission said today in Brussels. Consumer prices rose 2.5 percent from a year ago, the 18th successive month the rate of increase topped the ECB's target of just below 2 percent. This should be an additional pressure for the European Centrla Bank to increase their benchmark interest rates to 3% this week from 2.75%.

For the US data, Chicago Purchasing Manager's Index rose higher than expected as businesses expanded production to meet demand, a private survey showed. its regional index rose to 57.9 this month from 56.5 in June. A reading greater than 50 signals growth. The report is in line with broader U.S. data, such as increasing orders for durable goods, that show rising profits are spurring demand for business equipment and leading companies to increase production. Manufacturing growth is expected to help support growth this year as consumer spending softens and the housing market cools, economists said. Boosting uncertainty, St. Louis Federal Reserve Bank President William Poole said Monday he feels evenly split about the need for an 18th consecutive interest-rate hike at the Fed's meeting next week. This has caused the market with a confused mind on which side they should be on. I certainly know mine and I would bet heavily on it.

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Existing Trade
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Long EUR/USD @ 1.2680 with 1955 units. Stop loss placed at 1.2730 securing 50 pips profit or $9.77.

Gold is somehow becoming stronger but the price action from today is pretty mixed as well due to the interest rates expectations. A pause would bring the gold back to 660 range again. I'm expecting the whole weeks to be mixed, but somehow 1 side of traders will run out of steam. I certainly hope Euro will take a lead to break 1.30 this time. It's been so long!