The Week Ahead - Oct 10 EUR/USD - Euro Dollar, American Session - 10/10/08 EUR/USD - 1.3609 Daily Market Outlook - Oct 10 More EUR/USD The Week Ahead - Oct 10 GBP/USD - British Pound Dollar, American Session - 10/10/08 Shock and Awe for Markets All Around the World! More GBP/USD USD/CHF - Dollar Swiss Franc, American Session - 10/10/08 USD/CHF - Dollar Swiss Franc, European Session - 10/10/08 USD/CHF - Dollar Swiss Franc, American Session - 09/10/08 More USD/CHF

In a technically dominated trade, the EUR/USD fell as falling crude oil and a surging British Pound helped rally the U.S. Dollar. For the first time in four trading sessions, traders ignored news of an economic slowdown in the U.S. and instead allowed outside markets to dictate the short-term direction. The strong British Pound versus the Euro helped fuel the Dollar rally.

The financial markets in Chicago are indicating that the Fed is less likely to cut rates over the near term and that the ECB expected to raise rates in July. This anticipated action has widened the interest rate spread, making the Euro more attractive.

The key to higher markets, however, will be how the market reacts to a trade back into a retracement zone at 1.5573 to 1.5637. On Thursday, the Euro traded to 1.5586 before meeting sellers. This area is a battleground and controls the short-term direction of the market.

In order to create a bullish scenario, strong buying has to come in to thrust this market through the upper end of the retracement zone at 1.5637. If heavy selling surfaces, then look for another down leg to begin with momentum likely to push through 1.5282 this time.

Rally in Stock Market Helps Keep USD/JPY Steady to Better

In light trading activity, the USD/JPY worked inside of a narrow range on Thursday. This market is still having trouble breaking the week's high at 108.58 and a February top at 108.61. Chart watchers are looking for this correction to finish at 106.49 to 105.99. A correction into this area is likely to attract buyers.

Longer-term, the charts indicate a move to at least 109.94. The recent uncertainty in the stock market and the U.S. economy has temporarily slowed down the upside momentum. Traders have been seeking the safety of the Yen during times of economic turmoil. Look for the uptrend to continue once the stock market stabilizes.

Strong than Expected Retails Sales Drive British Pound Higher

The GBP/USD is in a downtrend, but showing signs of strength due to a better than expected U.K. Retail Sales number. This increase in Retail Sales, which was the most in two decades, demonstrates the strength of the consumer despite high food and energy prices and a weak housing market.

This surprise increase also confirms the Bank of England's decision to leave rates unchanged so as to prevent a stifling of economic growth. Bond prices fell in the U.K. as traders are placing bets that the BoE will not raise rates until next year.