Make Money Trading Currencies 4 Steps to Currency Trading Success

Make Money Trading Currencies – 4 Steps to Currency Trading Success

If you want to make money trading currencies, then we will show you how to do this in simple steps. Here we will give you the basics and help you build a currency trading system for long term trading success.

Step 1 – Get the Mindset for Success

You cannot get currency trading success from others and there are plenty of people wanting to sell you automated forex robots and systems but they don’t work. If you want to win, you have to understand that you need work and learn currency trading for yourself. If you do this, you will have confidence in what you do and the discipline to follow your system.

Most traders fail because, they don’t have the discipline to follow their system and if you don’t have the discipline to follow it, you don’t have a system!

Step 2 – The Methodology to Base Your System On

The best, simplest and easiest to understand methodology, is to buy or sell breakouts of price, to new market highs or lows.

Look at any forex chart and you will see most major trends start and continue from new market highs or lows. If you can go with them, you can make a lot of money. Most traders don’t and that’s why the majority lose.

Most traders want to wait for a pullback, to buy at a “better price” and of course prices don’t pullback and they sit and watch, as the trend sails over the horizon and makes thousands of dollars in profit and their not in!

Go with breakouts and sure you miss the first bit of the move – but if it’s a good break, you will have a lot of profit ahead of you.

Step 3 – Basics of Your System

You need to understand support and resistance.

Look for levels that are considered important by the market and the more times the level has been tested the better. You then need to confirm that when a break starts, the odds are on your side and it will continue and for this you need to use momentum oscillators.

We have discussed these fully in our other articles but for now, you simply need to know they will help you determine price strength through the breakout point. If price momentum accelerating, the odds are on your side and you can enter.

Look up the stochastic and RSI for this – there great indicators and you can learn how to use them in about 30 minutes.

Step 4 – Money Management

You need to play great defence and defend your equity. Just like all the great football teams, if you have a great defence, the offence will get the opportunities and make them successful.

With breakout trading, your stop is close and obvious (below the breakout point) and you should trail it slowly as the market moves.

Don’t make the mistake of using too much leverage.

You can get up to 400; 1 but 20:1 is plenty, more traders lose due to over leveraging than any other reason.

Putting it all Together

You don’t need a complicated currency trading system, you need to keep it simple so your trading system is robust, in the face of brutal market conditions. The key though is discipline; you must be able to trade through losing periods, until you hit a home run.

If you want to make money trading currencies – you can. The above tips will help you and remember, work smart not hard, keep it simple, get the right mindset and you will enjoy long term currency trading success.

Tactics to Make Money Off the Forex Market

Trading The Forex Market can be a lucrative way to make money if you have a firm understanding of what you are doing. The Foreign Exchange Currency Market also known as FOREX, is one of the largest financial markets in the World, and the great thing about it is that it is not heavily regulated or controlled by any major institution, in turn allowing the ordinary person to make money off the market if they are properly educated. The market operates 24 hours, 6 days a week and is extremely liquid so it is well suited to intraday and swing traders who are looking to make quick profits in a short timeframe.

If you are new to the world of Forex Trading, then it is absolutely mandatory that you go through the process of learning the basic concepts and ins and outs of the market before you dive in and risk your own money. The best way to do this would be to educate yourself on some simple concepts by visiting a site like Baby Pips and to practice the strategies you have learnt on a demo account (which most brokers offer) without risking your own money. This will help you build confidence and also give you a taste of how the actual market functions. Once you have educated yourself and are fairly comfortable trading on a demo account then you should be ready to trade on a Real Live account, however make sure you are absolutely ready and don’t jump in too soon or you will be literally setting yourself up for disaster.

However the truth of the matter is that even after most new traders have educated themselves on how the Forex Market works, they still struggle to make money and eventually become part of the 90% of traders who lose money in the world of Forex. You see trading the Forex Market is not that simple, and to become profitable you must gain a competitive edge over the competition, and in order to do so you must be an expert or become one fast if you wish to succeed. Now becoming an expert in Forex is no easy task, you would have to create your own trading system and make sure it can bring in consistent profits; this can only be achieved with years of experience trading actual live markets, and in the mean time it can cost you a lot of money if you are not careful.

A smarter and more efficient way to make some money off the Forex Market would be to follow in the footsteps of the experts who have already figured out how the market works and developed their own profitable systems to trade the markets. These experts through their years of testing and experience in trading the markets have come with systems that are proven to generate consistent profits off the Forex Market in the long run, and the best part about them is that once they have been created they can be completely automated. The reason why Many new traders fail to make money in Forex is because they are overwhelmed by all the information available on the internet and don’t know how to get started and which system to use. Therefore if someone has found a formula for success and all you have to do is replicate that formula in order to make money, I think it seems pretty logical to follow the formula and reap the benefits.

These Formulas or recipes for profitably trading the Forex market are commonly known as Expert Advisors and they are designed to completely automate your Forex Trading decisions. Most new traders suffer from natural human emotions such as Fear, greed, and inconsistency when trading the markets and do not make decisions based on strict analysis or stick to their trading plan (that is if they have one). Now with an Expert Advisor, it has a programmed strategy and trading plan, and it will stick to that plan no matter what the market conditions are like, the system will not get greedy when you have to take profits nor will it go out and place a trade simply to chase losses. The top commercially available expert advisors are regularly tested on live accounts and are traded with by the creators of the system, hence it is fairly easy for you to check out their results and actually see first hand if the systems are consistently profitable and make money in the Forex Market.

What you must understand is that to make big profits In Forex, all you need to do is have a simple robust trading system; have confidence in it and the discipline to follow it. You could come up with your own trading system, or to speed things up, you could get your hands on a decent Forex Expert Advisor. The choice is yours but either way you must remain consistent and disciplined in order to succeed, so put your head down begin learning the basics, keep your eyes on the prize and you will eventually be on your way to making some easy money off the Forex Market.

Forex Trading Success Understand The 5 Vital Facts So That You Can Make Huge FX Profits

Anybody can become a successful Forex trader and you do not necessarily work hard or have a college degree. In fact, 95% of traders fail to make money and only some people manage to win. To reach success in Forex trading you should get the right education and have the right mindset. If you understand the facts that I am going to share with you, you will be on the right path to reaching big profits in Forex.

So, you should understand important forex trading facts to win.

Forex trading assumes putting some efforts.

1. All Cheap Forex Robots Lose Money

There is a big industry online where people will convince you that you can make serious money without putting any efforts. Using cheap Forex robots or other forex trading systems, you can make big profits. Just think about it, do you really believe in a lifetime income without any effort? It sounds too good to be true. If you want to make good money, you should learn some essential information on successful trading. Anybody can do this.

2. Forex Trading is Simple

Anybody can trade successfully, as best trading strategies are simple. Use simple strategies instead of complex ones.

3. Forex Money Management is the Basis of Success

Forex trading success is built on solid money management. Usually traders make big mistakes of overleveraging their accounts or letting their losses run, but if you do this you will be wiped out. Many professional traders have more losing trades than winning ones but they still make large gains, as they keep their losses small and run their profits. So, concentrate on money making process.

4. The Ability To Take Responsibility

If you like to trade with the majority, you are not recommended to trade on Forex. The trader who tends to trade with the majority is destined to failure. It can be easily explained, the majority always fails. Always think for yourself, do not become affected by the majority and stand aside from the crowd sometimes.

5. The Ability To Perform Your Plan Disciplined

Discipline is one important feature that many traders have but if you can not trade with discipline, you do not have a strategy. If you step aside from your plan, you will fail. When they lose, they trade more than they should. But when trading on Forex, you should restrain your emotions and concentrate on the process of making money.

Enjoy Your Currency Trading Success

Anybody who is ready to spend some time and to invest some effort can learn how to trade successfully on forex market, in the end you are going to get great rewards. So, as you see, you should become a disciplined person if you want to win. So, consider all the important steps and you will attain success on the Forex market.

Because of troubles in the economies of many countries Foreign Exchange market is a very popular way of earning money. Those who are searching for productive strategy, might be interested in managed forex accounts. But please make sure to read about forex trading scam before dealing with forex trading.

It is a must to read unbiased reviews to make a decision “is forex a scam?” before you invest money into trading activity. This is important, don’t forget that we are living in the world where info quickly enhances the quality of our life.

That is why if you are properly armed with the knowledge in your sphere of interest you can rest assured that you will in any case find the way out from any bad situation. So, please make sure to track this site on a regular basis or – the easiest way to take care of it – sign up to its RSS feed. Thus you will have a direct shortcut to the latest info updates here. Blogs can be helpful, you just need to understand how to use blogging for the currency exchange market.

Forex Robots Can Provide Automated Trading

Maybe you have heard about forex robots, but do not have no idea of how they work.

You can also find based software that helps traders to make a good profit and reduce the risk of losing their money at the same time. When they are used by the beginners, Forex robots help to decrease human mistakes that are caused when people are affected by emotions. It is considered if these mistakes are eliminated, the trading profits can be boosted.

Before you understand how this type of software works, you need a clear understanding of Forex trading.

Through Forex trading companies convert currencies from all over the world. It is vital because it helps investment and trade on a world wide level. Though it is initially set for international business, people can still profit from this process as well. For instance, a person buys dollars and after a while the value of the Euro grows over the price paid. The dollars then can be sold at a profit. Most people like this system because of many opportunities it presents.

The Forex bot is considered to track the changes in the market and will make trades for you. For this you do not need to quit your job, the bot will do the work for you. The robots are supplied with trading signals. These signals tell the robot when it is the right time to sell or not sell.

After the first investment, a Forex robot requires no other costs and should do just the opposite making money for you. Therefore you just need to do a thorough research. Not all Forex bots are the same. It is important to always look out for updates to the software. Forex robots like any other programs are being enhanced with newer versions.

There are demo versions of these robots and you can use them as a good learning tool. However, it is not recommended to use them for a long time. When you have learned how it works, start making real money. If you do not, you are risking to develop that “no real money” mindset that can be unfavourable when you start making real money.

Bear in mind that no robot will guarantee you profit 100% of the time. A bot that produces winning trades at rate of 60% or more is a good product.

Command design to decrease losses is built into Forex software. This will ensure that you will not lose your savings. For instance, if you have a stop-loss set at 10%, and your stocks fall to this level, the robot would sell your stocks before you lose more money.

Find the most suitable Forex robot for you. Investigate the program, put it into action, and get profit. Successful trading!

Because of hard times in the world economy Forex is a very popular way of earning money. Those who are looking for effective strategy, might be interested in managed forex account. But please it’s important that you read about forex trading scams before dealing with forex trading.

It is a must to read unbiased reviews and perform forex scam check before you invest money into trading activity. This is important, don’t forget that we are living in the world where information makes life easier.

That is why if you are properly armed with the knowledge in your sphere of interest you can be sure that you will in any case find the solution to any bad situation. So, please make sure to visit this web site on a regular basis or – the easiest way to take care of it – sign up to its RSS. In such an easy way you will have your hand on the pulse of the latest informational updates here. Blogs can be helpful, you just need to know how to use blogging for the currency exchange market.

Currency Trading Tips

Currencies are traded in the foreign exchange market (forex) 24 hours a day, 7 days a week. Forex, is the largest and the most liquid financial market in the world and the very size of the market tends to reduce the possibility of market manipulation by a select group of people. Hence, the foreign exchange market is loosely regulated by the Commodity Futures Trading Commission (CFTC). Currency pairs are not traded in a centralized exchange but are traded between agreeable buyers and sellers in the over-the-counter market (OTC).

Currency Trading Tips

Using Leverage Wisely: Use of leverage is encouraged in the foreign exchange market since fluctuations in the price of a currency pair are typically fractions of a cent. The maximum leverage that can be employed by a trader is calculated using the following formula:

Maximum Leverage (Margin-Based Leverage) = Value of Transaction / Margin Requirement

For instance, if a person wants to control 0,000 worth of trade, he/she can borrow the sum from the broker by depositing a small initial margin. Say, the margin requirement is 2 percent of the total transaction value, the trader is expected to deposit 00. Thus, the trader’s margin based leverage is 50:1. Using excessive leverage, especially when one is unsure about the direction of the market, can land one in deep trouble. Trading on margin is only advisable for people who have the capability of interpreting forex signals or have reliable automatic forex trading robots. For more on forex signals one may refer to the article, ‘Accurate Forex Signals: How to Find Profitable Forex Signals’

Placing Stop and Limit Orders: Placing stop orders is useful from the perspective of limiting losses and taking advantage of the potential upside breakout. Placing a limit order allows people to enter a new position or to exit a current position at the specified or better price. A limit order may never be executed because the market price may quickly surpass the limit before the order can be executed. The term better is relative to the nature of the limit order that is placed. A trader, who would like to sell a currency pair, places a limit sell order at a price above the current market price to book profits; while a trader, who would like to buy, sets a limit price below the current price. In the first case, the sell-stop order should be placed below the current market price to attempt to cap the loss on the position while in the second case a buy-stop order should be placed at a level above the current price. These are useful currency trading strategies.

Using Fundamental and Technical Analysis: Fundamental and Technical analysis are different, although both are necessary from the perspective of gauging currency movements. The former tries to determine fluctuations in the price of the currency by assessing factors that have a direct bearing on the value of the currency; while the latter relies on charts and graphs to effectively compare past trends and repetitive patterns to predict fluctuations in value. The charts, that are used in technical analysis, are Line Charts, Bar Charts and Candlestick Charts.

Line charts connect the opening and the closing price with a line while bar charts use vertical bars to indicate the range of the currency for a given time period. Candlestick charts give the opening price, the closing price, the highest price and the lowest price with the help of a vertical bar. If the closing price is less than the opening price, the vertical bar is colored.

Understanding Chart Indicators: Understanding leading and lagging indicators is critical from the perspective of being able to spot changes that may occur in the movement of currency pairs. These are important currency trading basics.

Leading indicators help a trader spot a change where the previous trend has run its course and the price is ready to change direction again. Lagging indicators provide an indication of the possible changes in trend once the change is clearly visible. The latter is meant to encourage people to move with the herd while the former is useful for a trader who is adept at spotting reversals before they occur.

Although, leading indicators seem like a potential gold mine, they have the tendency of misleading or giving wrong signals. Lagging indicators, on the other hand, rarely mislead. However, the downside is that a person may lose the opportunity to make a huge kill and may end up with a smaller chunk. The most common leading and lagging indicators are Oscillators and Momentum indicators respectively.

Stochastic, Parabolic Stop and Reversal (SAR) and Relative Strength Index (RSI) are examples of oscillators that used to determine overbought and oversold market conditions. For instance, in the case of Relative Strength Index (RSI), on a scale of 0 to 100, a value below 20 indicates an oversold market while a value above 80 indicates an overbought market. If a chart has been indicating oversold (or overbought) conditions, for a certain length of time, one can expect an increase (or decrease) in the price of the currency pair in future. The problem with the aforementioned leading indicators, is that they may provide conflicting signals. In such a situation it would be best to ignore the signal.

Momentum indicators are lagging indicators that generally give the right signal at the expense of delayed entry. People have to choose between leading and lagging indicators since the signals are generally conflicting.

Forex Robots: Forex trading requires the ability to interpret a number of chart indicators needed for ensuring profitable forex trade. There are numerous forex signal systems that have been designed by professional money managers. These systems have been designed using past performance and trends to simulate results that may reflect the actual trading environment. Both mechanical and automated forex currency trading systems are available in the market. The latter does not require the presence of a trader in order to execute trades while the former provides currency trading tips that are useful for executing trades. Automatic forex trading robots ensure round the clock trades without any supervision and are thus effective in removing the human element from trading. Fully automatic forex trading robots can help one dispense with forex brokers who were previously required to manage accounts. However, one must remember that past performance is not indicative of future results. So, a robot that works well during back testing may not always yield the best results.

A good forex system should be constantly monitored in order to ensure improved and optimized trade. The trading account should require less investment and initially, one should be able to trade with a demo account. Forex robot systems should also have an inbuilt loss protection mechanism since these systems are not foolproof. These robots can be used by traders, brokers and institutional investors.

Advantages of Currency Trading

Increased Liquidity: As mentioned earlier, forex is the most liquid market in the world. Increased liquidity ensures that the trades gets executed at the desired price.

Ability to Use Leverage: Increased use of leverage is permitted in the forex market since price fluctuations are typically fractions of a cent. People are allowed to start trading with very little money in their account and are encouraged to control an extensive sum of money in lieu of an initial margin requirement.

Increased Profitability: The ability to employ leverage results in increased return on investment (ROI). Huge profits with a small up-front investment is one of the benefits of forex trading. Moreover, traders are allowed to split their capital gains to their advantage since regardless of the time of executing the trade, 40 percent of the profits that accrue to the trader get taxed at the short term capital gains rate while the remaining 60 percent is taxed at the lower long-term capital gains rates.

Guaranteed Stops: People are allowed to place both buy-stop orders and sell-stop orders. The former allows the trader to buy the currency pair at a price that is set above the current market price. The buy-stop order is triggered when the market price touches or exceeds the buy-stop price. People place buy stop-orders when they would like to trade the potential upside breakout.

Similarly, sell-stop orders can be placed to sell the currency pair at a price that is set below the current price. The sell-stop order is triggered when the market price touches or falls below the sell-stop price. These sell-stop orders are placed by traders in order to limit their losses. These are also known as stop-loss orders.

Low/No Processing Fee: Many brokers do not charge extra fees for opening or closing a trading account, for phone trading, for inactive accounts or for changing stop or limit orders.

No Commissions: The absence of commission on forex trades is another benefit of currency trading. This is because the spread between the bid/ask price is the compensation for market makers.

Most businesses undertake currency hedging to prevent losses that accrue on account of unfavorable exchange rate movements. For more on currency hedging one may refer to the article, ‘Currency Hedging by Importers’.

Hopefully, the above article on currency trading tips would have provided some insight into the world of forex trading. One must remember that although an experienced forex trader has the

Currency Trading Training - Are You Kidding?

Currency trading training is essential for your success in the Forex market. Wait! Are you kidding me? I have to have training? You mean I can't just dump $250 in a Forex broker account and become an overnight millionaire? You know I hated school - do I have to go to school and all?

Well, yes. That's pretty much it. I mean, you may not have to sit in a classroom with a bunch of teens who don't really want to be there. But you will definitely need some training.

So, how do you go about getting currency trading training? A search on the Internet may not be of much help. There are so many Forex scams, it's tough to find legitimate training programs. And, contrary to norms, the most expensive program is not necessarily the best. You see, most successful traders are wealthy, or well on their way to being wealthy. Many of those traders feel the desire to "give back" to new traders and so they will train you for a relatively small amount, just enough to ensure your commitment level. The trick, then, is to find these people.

The first thing is, don't be fooled by anyone who advertises overnight riches. It just doesn't happen that way. Once you learn how to trade properly, you can make big money doing it. But it's not going to happen overnight or even over a few weeks.

Second, be prepared to take some losses. There is no whiz-bang, win-all-the-time, 100%, mondo, slammin', jammin', holy grail trading system. There are trading systems that win a majority of the time, but they MUST be teamed with proper risk and money management strategies. Why? Because you WILL lose some trades. If you can't handle that, pick another career quickly. So, that's a clue to the second group you should stay away from. Anyone who promises a 100% accurate system

Currency Derivatives

Never keep all your eggs in one basket" - Financial markets are a classic example of this proverb. These markets all around the world in all categories and at all points of time have taught us to keep our investments diversified into various instruments. Hence, we at Kotak Securities have brought a new investment opportunity for all Resident Indians, who can now diversify their portfolio, by trading in Currency Derivatives.

Currency derivative is a contract between the seller and buyer, whose value is to be derived from the underlying asset, the currency amount. A derivative based on currency exchange rates is a future contract which stipulates the rate at which a given currency can be exchanged for another currency as at a future date.

For the first time this segment is accessible to the retail players in the

currency trading market. Further, Kotak Securities clients will enjoy the following major advantages:

A) Currency Derivatives (Currency Futures), Equities and Mutual Funds can be traded on one trading platform
B) Your Cash margin with Kotak Securities can be used for all the three segments
C) Exclusive research reports and seminars for Currency Derivatives Trading

Product Details
How will you benefit from Currency Trading?
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Forex News & Currency Trading Analysis

Latest Forex News

U.S. Dollar Trading (USD) was battered once more to trade at record lows against the AUD and XAU overnight. The Dollar failed to make any ground as a round of risk aversion, boosted by better than expected earnings from JP Morgan and Intel, was cause for a positive showing in Wall Street. The Dow Jones ended 75 points higher, the S&P was up 0.82%, and the NASDAQ rose by 23.31 points. In data ahead, Trade Balance, PPI, and weekly jobless claims are all scheduled for release on Thursday.

The Euro (EUR) once more was rejected at the magical 1.4000 level on Wednesday, in a range trading session following a quite data day for the Eurozone. The Euro played second fiddle to Soaring Gold price, and AUD at 28 year highs (Post Float). Overall the EURUSD traded with a low of 1.3913 and a high of 1.4001 before closing the day at 1.3962.

The Japanese Yen (JPY) machinery orders reached two year highs in what was an uninspiring trade day for the Yen. The Japanese yen traded in an extremely tight range with a low of 81.72 and a high of 81.95 before closing at 81.76

The Sterling (GBP) gained on the back of positive earning in US, and Hawkish comments from BoE member Sentence who said interest rates will need to rise gradually to counter inflation. The GBP traded with a low of 1.5772 and a high of 1.5909 before closing the day at 1.5895.

The Australian Dollar (AUD) traded at fresh 28 year post float highs during the US session as positive earning boosted sentiment in the on Wall Street. The AUD was further boosted by Westpac Consumer Confidence rising 3.3% in the month of October. The AUD traded with a high of 0.9936 and a low of 0.9834 before closing the day at 0.9903. UPDATE Trades at 0.9972 fresh high on Thursday morning in Asia

Oil & Gold (XAU) XAU traded at an all-time high of 1,375.00 an ounce during the US session on buoyant investor demand, whilst Oil too rose on Wednesday to trade at US$83.45 a barrel. UPDATE XAU trades at fresh record highs of 1377.20

Euro – 1.4040

Initial support at 1.3799 (Oct 6 low) followed by 1.3637 (Oct 5 low). Initial resistance is now located at 1.4029 (Oct 7 High) followed by 1.4194 (Feb 3 high)

Yen – 81.55

Initial support is located at 79.75 (April 1995 low) followed by 75 (Round number). Initial resistance is now at 84.50 (Sep 27 high) followed by 85.93 (Sept 16 high).

Pound – 1.5965

Initial support at 1.5670 (Sept 30 low) followed by 1.5503 (Sept 21 low). Initial resistance is now at 1.6018 (Oct 7 high) followed by 1.6253 (76.4% retrace of 1.6878-1.4231).

Australian Dollar – 0.9960

Initial support at 0.9709 followed by the 0.9542 (Oct 5 low). Initial resistance is now at 1.0000 followed by 1.0211.

Gold – 1376.30

Initial support at 1312 (Oct 5 low) followed by 1283 (Sept 28 low). Initial resistance is now at 1381 followed by 1400 (Round Number).

Oil – 83.70

Initial support at 81.00 (Intraday Support) followed by 80.00 (Intraday Support). Initial resistance is now at 82.50 (Intraday Resistance) followed by 84.00 (Intraday Resistance).

Forex: Bearish U.S. Dollar Sentiment Gathers Pace, Euro Breaks Narrow Range Read more at: Forex @ DailyFX - Forex: Bearish U.S. Dollar Sentiment Gath

• Japanese Yen: Mixed Amongst Major Currencies
• Pound: BOE’s Posen Sees Scope For Further Easing
• Euro: ECB Says Rates ‘Appropriate’
• U.S. Dollar: Producer Prices, Trade Balance on Tap

The U.S. dollar weakened further against its major currency counterparts, with the EUR/USD rallying to a high of 1.4121 on Thursday, and the bearish momentum behind the greenback may carry into the end of the week as investors expect the Fed to expand monetary policy further. As EUR/USD breaks out of the narrow range from earlier this week, we are likely to see the pair continue to retrace the decline from earlier this year, and euro-dollar looks poised to make a run at 1.4440-50, the 78.6% Fibonacci retracement from the 2009 high to the 2010 low, as price action holds steadily above the 61.8% Fib around 1.3890-1.3900. With the 50-Day moving average (1.3158) approaching the 200-Day SMA at 1.3165, the bullish crossover suggests that the exchange rate will continue to push higher throughout the month, but there could be a corrective retracement in the coming days as the recent rally remains overbought. Given the strong bearish sentiment underlying the greenback, we would need the RSI to fall back below 70 to see a pullback in the exchange rate, and the rally may carry into the following week as the index bounces back to 78.

Meanwhile, the European Central Bank reiterated that the interest rate is “appropriate” in its monthly report and went onto say that price growth remains contained as the ongoing slack within the economy bears down on inflation. At the same time, ECB board member Yves Mersch said that the recovery in Europe remains in-line with the central bank’s forecast and that the recent slew of soft data “does not warrant increased pessimism” for the region, but went onto say that it remains “too early to claim victory” as the economic outlook remains clouded with uncertainties. As the Governing Council maintains a neutral outlook for future policy, the ECB may look to reestablish its exit strategy going into 2011, which would instill a bullish outlook for the single-currency in the beginning of the following year as the Fed maintains a dovish stance.

The British pound rallied to a fresh monthly high of 1.6066 during the overnight, and the exchange rate is likely to push higher going into the end of the week as carves out a short-term bottom around 1.5700, the 38.2% Fibonacci retracement from the 2009 low to high. As a result, the GBP/USD looks poised to test the 23.6% Fib around 1.6230-40, and the pair may continue to retrace the decline from the beginning of this year as the rally gathers pace. Meanwhile, Bank of England board member Adam Posen said that the global economy needs increased monetary stimulus according to an article in the Handelsblatt newspaper, and Mr. Posen may push to expand policy further in the coming months given the substantial amount of slack within the real economy. As a result, the British Pound is likely to face increased volatility over the following week as the BoE is scheduled to release its policy meeting minutes on Wednesday, and a three-way split within the MPC could spark a sharp selloff in the GBP/USD as market participants see scope for the BoE to expand quantitative easing further over the coming months.

The greenback weakened against all of its major counterparts, with the USD/JPY tumbling to a fresh yearly low of 80.88, but the dollar is likely to face increased volatility going into the end of the week as the economic docket is expected to reinforce a mixed outlook for future growth. Producer prices in the world’s largest economy is forecasted to increase at an annualized pace of 3.7% in September after rising 3.1% in the previous month, while the trade deficit is expected to widen to -$44.0B in August from -$42..8B in the month prior. However, market participants may turn a blind eye to the economic developments as they look towards the Fed’s interest rate decision on November 3, and comments from the central bank are likely to play an increased role in dictating price action as investors weigh the prospects for future policy