Forex and Dow Jones recommended levels EUR/USD - 1.3590 Daily Market Outlook - Oct 7 EUR/USD: The Euro bounces up and intraday bias is on the upside More EUR/USD USD/CHF - Dollar Swiss Franc, American Session - 06/10/08 USD/CHF - Dollar Swiss Franc, European Session - 06/10/08 Chart of the Day - 10/03/2008 - USD/CHF More USD/CHF Forex and Dow Jones recommended levels Market Moving News: USD/JPY - Oct 7 USD/JPY - 101.67 Daily Market Outlook - Oct 6 More USD/JPY

The EUR/USD fell sharply lower on Tuesday as this pair received a double-dose of negative news. A combination of bearish factors today including weakening Euro Zone consumer confidence and better than expected U.S. new home sales triggered strong selling after the Euro failed to hold small gains above last weeks high.

Bearish economic news seems to be building in the Euro Zone, suggesting that the trend may be turning down in the economy. German and French consumer confidence both fell more than forecast in May.

In the U.S., although consumer confidence fell to multi-year lows, a surprisingly stronger than expected home sales report attracted buyers to the Dollar.

The combination of the bearish fundamental news out of the Euro Zone and stronger than expected housing numbers should linger in the market for a few more days, thereby putting pressure on the EUR/USD.

Technically, the Euro posted a daily reversal down, which could prove to be a bearish pattern should there be follow through selling tomorrow. The charts are set up for a break to 1.5550 to 1.5487.

USD/JPY Rallies on Crude Break and Stock Market Rally

Traders bought the USD/JPY as the need for higher priced assets funded by cheap Japanese loans fueled the stock market. The break in crude oil also made the Dollar more attractive as traders lifted their hedges. The stronger than expected home sales number also weighed on the Yen. Traders have been indecisive lately about the direction of the USD/JPY because of economic uncertainty in the U.S. Today's report may provide the confidence for traders to drive this pair higher.

Technically, the USD/JPY remains range bound. In bullish news, the market overtook a downtrend line at 103.99. This signals the start of a rally. Look for the market to test the two tops at 105.44 and 105.71. A break through these two levels reaffirms the up trend.

U.K. Housing Numbers Come in Bad; Bank of England Ponders Rate Cut

The trend could not turn higher on the recent rally and is now poised to correct at least 50% because of the poor U.K. housing numbers. Much of the rally the last week was driven by better than expected retail sales, but the dismal housing market is raising concerns that the consumer will begin to cut back on his spending habits if home prices continue to decline.