Forex - Dollar posted it biggest one-day gain against majors on changing interest and economic outlook

Forex News and Events: The Dollar rallied on Friday, posting its biggest one-day gain versus the Euro in 7-1/2 years as the Market changed outlook on interest rate amid signs the US slowdown was spilling over to the global economy. EurUsd traded below $1.5000 for the first time since February helped by Oil prices tumbling below $115 per barrel. European Central Bank President Jean-Claude Trichet's highlighting of increasing risks to euro zone growth on Thursday had left traders to conclude that monetary policy would have to become looser, analysts said. Added to that, the Japanese government cautioned the country's economy might be in recession. Monetary easing in the Euro area and the UK would narrow the interest rate differential with the United States, a major factor behind the Dollar's unprecedented decline. EurUsd dived to 1.4998 low on Friday, a 5-1/2-month low. It was last trading at 1.5008 down 2%, its steepest one-day drop since December 2000. The Euro is now about 10 cents below a record high of 1.6038 struck less than a month ago against Dollar. GbpUsd dropped 1.18% to 1.9205, retracing from a 17-month low 1.9146. UsdJpy touched 110.37 high on Friday, its highest since January. It traded last up 0.78% to 110.19. UsdChf rose 1.86% to 1.0822, its highest since February.

Today's Key Issues (time in GMT): 06:00 EUR July Germany Wholesales price index 0.5% vs 0.9% (MoM) 06:00 EUR July Germany Wholesales price index 9% vs 8.9% (YoY) 06:45 EUR June French Industrial output 0.4% vs -0.6% (MoM) 07:30 DKK July CPI 4% vs 3.8% (YoY) 08:00 NOK July CPI 3.9% vs 3.4% (YoY) 08:30 GBP July PPI Core output 0.4% vs 0.3% (MoM) 08:30 GBP July PPI Core output 6.5% vs 6.3% (YoY) 08:30 GBP July PPI Input prices 1% vs 2.1% (MoM) 08:30 GBP July PPI Input prices 29.8% vs 30% (YoY) 08:30 GBP June Trade Balance -£7.4B vs -£7.49B 23:50 JPY July Corp goods price 0.8% vs 0.8% (MoM) 23:50 JPY July Corp goods price 5.8% vs 5.6% (YoY)

The Risk Today: EurUsd Market dropped to 1.4998 low on Friday breaking below 1.5000 key level. Minor support holds 1.4918 today low. On the upside, only a return over 1.5500 will put key initial resistance 1.6000 into focus. A break up there would open the way to Trendline resistance 1.6200. GbpUsd Cable hit 2.0158 high 4-weeks ago and 1.9146 low last week. Key level holds 2.0100 resistance. On the downside, Friday break below on 1.9337 January low support put the focus on 1.9105 (50% retracement of 1.7049 – 2.1162 advance). Former support 1.9363 holds strong resistance. UsdJpy Last 3-weeks recovery pushed the market up to 110.37 high on Friday. The last break of 108.59 former resistance put focus on 110.10 strong resistance (Trendline). Further advance would open the way toward 111.92 early January high. On the downside, a return below 108.59 former resistance will undermine the current advance. Profit taking might bring back down to 105 level and may open the way toward 102.73 support and 100 pivot point. UsdChf Recent Dollar strength pushed over 1.0500 last week and hit 1.0838 high on Friday. Market broke up resistance of the 3-months upper trendline at 1.0766. Initial support holds 1.0500 key level. Renewed weakness below 1.0375 would retest the 1.0000 pivot point and may open the way toward 0.9637 17th March low.

Resistance and Support: EURUSD GBPUSD USDJPY USDCHF 1.6200 T 2.1162 S 111.92 K 1.1191 K 1.6000 K 2.0100 K 110.37 M 1.0852 M 1.5500 P 1.9363 S 110.10 T 1.0838 M 1.4980 1.9190 110.05 1.0820 1.4918 M 1.9146 M 108.59 S 1.0500 K 1.4780 S 1.9126 M 102.73 S 1.0000 P 1.4440 T 1.9105 T 100.00 P 0.9637 K S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot