- Forex Commentary -

September 21, 2010 (FinancialWire) (Investrend Information Syndicate) (Via Brewer Investment Group) (Overnight, September 20, 2010, Report) (Go to http://www.financialwire.net/?s=cmmtry for all recent commentaries.) — The U.S. Dollar traded slightly lower versus the Euro as traders factored in the possibility of more monetary policy easing by the Federal Reserve at tomorrow’s Federal Open Market Committee Meeting.

The FOMC is not expected to take action on interest rates, but may announce another round of bond purchases, known as quantitative easing. This action is supposed to act as stimulus to help revive the ailing U.S. economy.

Since the summer, a series of economic reports have indicated that the U.S. economy is stalling. Although a double-dip recession is now a remote possibility, based on recent Fed language, the central bank feels that the economy has slowed down enough to warrant further quantitative easing.

On Monday the Euro held on to its slight gains despite more rumors of sovereign debt problems in Ireland and Portugal. One analyst described the situation as “ugly” particularly in the Irish and Portuguese bond markets.

Technically, the EUR USD had an inside day following Friday’s closing price reversal top. Overnight, bullish traders defended last Friday’s low at 1.3019, thereby preventing the confirmation of the reversal pattern. A confirmation of this pattern could trigger the start of a break to 1.2901. A trade through 1.3159 will negate the pattern and should trigger an acceleration to the upside. Throughout the day, the Fibonacci level at 1.3049 provided support.

The British Pound fell against the Dollar amid reports that showed the U.K.’s M4 money supply unexpectedly dropped in August and mortgage lending continued to slow in July. Traders were also paring positions ahead of the release of the Bank of England minutes on September 22nd.

Technically, look for the GBP USD to continue to weaken into a short-term retracement zone at 1.5512 to 1.5461. An uptrending Gann angle inside this zone could provide additional support. Watch for the market to settle into this zone or encourage profit-taking following the break.

The USD JPY lost a little ground as traders pared long positions ahead of the FOMC meeting. Trading has been in a tight range since last Wednesday’s intervention. Fear that the Fed may decide on additional quantitative easing weakened the Dollar versus the Yen.

Technically, the Dollar/Yen is having trouble breaking through a pair of tops at 85.90 and 85.91. Once this area is cleared, the charts indicate that there is room to the upside. The best case scenario has this market eventually rallying to a major 50% price level at 88.93, but this is not likely to occur unless Japanese officials intervene once again.  On the downside, a test of a retracement zone at 84.40 to 84.04 is likely to attract fresh buying.

Source: Courtesy of Brewer Investment Group, LLC; For more information, content and/or a preferred introduction to Brewer Investment Group, LLC and/or Brewer Futures Group, LLC, contact Investrend Syndications (via http://www.investrend.com/synd0001), and go to http://www.financialwire.net/?s=brwrgrprgw for other commentaries courtesy of the Brewer Group.

Brewer Investment Group, LLC, advises that Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee from Brewer FX, LLC and Brewer Investment Group, LLC or its subsidiaries and/or affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of positions such as "spread" or "straddle" trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. For more information, content and/or a preferred introduction to Brewer Investment Group, LLC and/or Brewer Futures Group, LLC, contact Investrend Syndications (via http://www.investrend.com/synd0001).

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