Forex - Dollar tumbles to new lows on Kohn statement

Forex News and Events: Yesterday late afternoon, Federal Reserve Vice-Chairman Donald Kohn announced that the housing market troubles were not over and expects to not see an economic recovery for now. He further said that risks to economic growth were a larger concern than inflation. This can be interpreted as the US central bank being forced to further cut rates as the Fed looks to handle “difficult times.” The Euro hit $1.5050, the highest point since the currency’s inception in 1999. The 1.5000 handle was viewed as a major psychological level, and once passed, triggered a wave of buy orders, pushing the Euro up to 1.5050 in seconds. Traders eye the 1.5100-1.5150 level as more buy orders are seen in the vicinity. With gold mining companies closing out their hedging positions, the dollar falling and gold in limited supply, the only direction for prices is up. Spot Gold hit $964 an ounce in early trading today. Spot Silver hit $19.26 an ounce. The precious metals continue to be the safe haven currency of choice.

Today's Key Issues (time in GMT): 09:00 EUR Euro-Zone (3 YoY) s.a. (JAN) 11.3% vs 11.5% 09:00 EUR Euro-Zone M3 s.a. 3 Month Avg (JAN) 11.8% vs 12.1% 09:00 EUR ECB's Weber Speaks in Bonn, Germany 09:30 GBP Gross Domestic Product (QoQ) (4Q P) 0.6% vs 0.6% 09:30 GBP Gross Domestic Product (YoY) (4Q P) 2.9% vs 2.9% 09:30 GBP Private Consumption (4Q P) 0.6% vs 1.1% 09:30 GBP Government Spending (4Q P) 0.6% vs 0.3% 09:30 GBP Gross Fixed Capital Formation (4Q P) 0.7% vs 2.4% 09:30 GBP Exports (4Q P) 0.4% vs 2.0% 09:30 GBP Imports (4Q P) -0.1% vs 4.7% 09:30 GBP Index of Services (3mth/3mth) (DEC) 0.7% vs 0.6% 10:00 EUR Bank Of France Report with ECB's Noyer speaking 11:45 EUR ECB's Bini Smaghi Speaks in Florence 12:00 USD MBA Mortgage Applications (FEB 22) 13:30 USD Durable Goods Orders (JAN) -4.0% vs 5.2% (R+) 13:30 USD Durables Ex Transportation (JAN) -1.3% vs 2.6% (R+) 13:30 EUR ECB's Wellink Speaks in New York 15:00 USD New Homes Sales (YoY) (JAN) 600K vs 604K 15:00 USD New Homes Sales (MoM) (JAN) -0.7% vs -4.7% 15:00 USD Bernanke Testifies Before House Panel on Monetary Panel 15:00 USD Fed's Mishkin Speaks on Financial Literacy in Washington 15:00 USD Bernanke Report On Economy and Fed Policy 21:45 NZD Visitor Arrivals (JAN)

The Risk Today: EurUsd will not form a quadruple top, instead head for new highs above 1.5000. Next level to watch is 1.5100 and 1.5100. On the downside, 1.5000 will hold as initial support and a break below would put the pair back into a range. GbpUsd experienced a healthy rebound to its resistance of 1.9960. A break above would see the pair move to the psychological 2.0000. On the downside, strong support holds firm at 1.9731. UsdJpy has broken its support of 106.50 which can now signal a fast run to 104.22, the May 5th, 2005 low. If there is no break of 105.60, the pair will remain in a range below 108.53 and 105.60. UsdChf is heading to historical lows having just broken the support of 1.0736. If the downtrend remains intact, our medium-term target is 1.0368. On the upside, a break above 1.0845 would put the pair back into its 2008 range.

Resistance and Support: EURUSD GBPUSD USDJPY USDCHF 1.5200 K 2.0232 S 114.00 M 1.1114 S 1.5150 S 2.0107 S 111.92 S 1.1035 S 1.5100 S 2.0000 M 110.10 S 1.0845 M 1.5062 1.9938 106.41 P 1.0690 1.4950 P 1.9850 M 106.00 S 1.0510 M 1.4778 T 1.9645 S 105.77 M 1.0400 S 1.4443 S 1.9369 S 104.97 T 1.0368 K S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot