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USDJPY inside-pin bar, EURUSD recap, 18th May 2011

Forex Commentary:

The euro traded little changed against the dollar on Wednesday, but remains vulnerable to losses given Greece’s debt situation and raised expectations that a U.S. Federal Reserve rate hike may come sooner than expected.

But Dan Dorrow, head of research at Faros Trading in Stamford, Connecticut, said despite the contents of the Fed’s meeting minutes, interest rates still favor the euro over the dollar. “Until there are signs that inflation is picking up or there is a significant pickup in economic momentum, the Fed will likely refrain from raising rates for quite some time,” he said.

The dollar index .DXY was flat at 75.42, below a six-week high around 76.0 hit earlier in the week. The dollar traded 0.3 percent higher against the yen at 81.70

Trading Setups / Chart in Focus:

USDJPY

The USDJPY strength that we mentioned in yesterday’s commentary has continued today. We can see an inside pin bar formed today just above the 21 day EMA. Should the mother bar high break we could see a larger up-move towards the next resistance area near 82.80.

Also, the 8 and 21 day EMAs have not crossed higher yet but they are pointed up and could cross higher if price breaks higher in the next 24 hours. Overall this chart is looking poised for a potential pop higher before it moves lower again.

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EURUSD

The EURUSD broke up from the inside bar setup that formed yesterday. Should the retracement higher continue to find buyers we could see a move towards the next horizontal resistance which comes in near 1.4500 before price heads lower again.

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For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my price action forex trading website.

Other Markets:

On Wall Street today stocks ended a three-day losing streak on the back of a rally in commodities and strong earnings from Dell, however headwinds remain.

U.S. crude oil futures rallied more than 3 percent today to close back above $100 a barrel as inventories fell unexpectedly.

The Dow added 80.60 points, or 0.65 percent, the S&P 500 gained 11.70 points, or 0.88 percent, and the Nasdaq gained 31.79 points, or 1.14 percent.

Upcoming important economic announcements: 5/19/2011

4:30am EST: Britain – Retail sales m/m
8:30am EST: United States – Unemployment Claims
10:00am EST: United States – Existing Home Sales
10:00am EST: United States – Philly Fed Manufacturing Index
Tentative: Japan – Monetary Policy Statement
Tentative: Japan – Overnight Call Rate