Rupees 2 Won

A sharp decline through the week’s open for crude is a convincing sign that the market has indeed reversed course after running a five-week bullish trend and just before testing two-month highs. In fact, the active futures contract on the NYMEX would put in for the biggest single-day decline in two weeks, a move that would subsequently confirm the first back-to-back daily loss for the instrument since the February 4th/5th plunge.

The euro ended a three day rally against the dollar as concerns that emerging markets China and India will look to take measures to slow their economies. A broader pull back in risk appetite has weighed on the EUR/USD which has maintained a 43% correlation with stock markets over the past month.

The Federal Open Market Committee is widely expected to hold the benchmark interest rate at 0.25% in March as the central bank aims to encourage a sustainable recovery in the world’s largest economy, but comments following the rate decision are likely to spark increased volatility in the exchange rate as Fed aims to normalize policy this year.

US Dollar at Risk for Further Declines versus Euro on FX Positioning
Euro Will Struggle to Develop a Trend with Greece Back in the Headlines
Japanese Yen: Speculation for Intervention to Intensify Ahead of BoJ
British Pound May Rise as Bank of England Releases Meeting Minutes
Swiss Franc Vulnerable As SNB Threat Grows
Canadian Dollar on Pace for Parity Against the US Dollar
Australian Dollar May be Losing its Cache as the Only Carry Currency
New Zealand Dollar Drivers Lacking, Ranges Set  to Persist

There is a growing divergence in the state of the financial market’s fundamentals and its general level of activity. In the past week, there have been developments that have degraded the fidelity of the Euro Zone, leveraged the threat of a financial crisis in China and added risk to the very assets that are used to establish risk-free returns.

The EURUSD rally has reached parallel channel resistance and is rolling over. Parallel channels are common end areas for 4th waves.

Risk appetite has started to wane following a week of tepid gains which could point toward a potential reversal. The EUR/USD is already under pressure and appears to be outpacing broader risk sentiment.

The greenback strengthened against all of the majors on Monday, with the Canadian dollar weakening for the first time this month, while the British Pound halted the three-day rally as the Bank of England held a cautious outlook for the U.K.

A valuable tool used by experienced traders is a table of the biggest moving currency pairs over a designated period of time.

The Swiss National Bank reaffirmed its stance that it will prevent excessive Franc appreciation following its last policy meeting, where members voted to leave the target interest rate unchanged at 0.25%. However, the central bank did raise its outlook for inflation and growth which along with continued risk appetite has helped fuel a Franc rally. The USD/CHF is currently testing staunch support levels which could see bearish conviction wane with the looming threat of intervention, creating an ideal scalping environment.

A range bound market is noted by a number of moves between two similar price points.  The 4-hour chart of the EUR/USD is a good example of a market in a range. 
 

Improving growth trends has started to generate concerns that rising prices will soon follow forcing policy makers to abandon easy policy. This week’s calendar will provide evidence as to whether inflation is a growing issue with consumer price reports from the Euro-are, United States and Canada. The FOMC rate decision will be the marquee event as monetary policy in the world’s largest economy has far reaching implications. A change in rhetoric from policy makers could create a new paradigm for the dollar. U.K. employment figures and the BoE policy meeting minutes crossing the wires at the same time could set a new trend for the Pound.

Instead of posting a chart today, I thought I would show some important economic releases that will take place this week.

Currencies have been in the process of consolidating recent moves, with most tracking lower against the buck in early trade Monday.