Friday's unemployment report showed that the U.S. economy lost jobs for the third month in a row. The data confirmed Bernanke's testimony before Congress on Wednesday that conditions are right for a recession.

There was a knee-jerk reaction at first as traders took the way of least resistance and sold Dollars. After this initial retreat most pairs settled into a tight range-bound trade.

Financial market traders in Chicago increased the percentage of a 50 bp rate cut by the Fed on April 30 to 38% percent. This potential widening of the interest rate differential is normally a huge signal to pressure the Dollar. Regaining strength late in the session, the USD showed signs that there may be something other than weakness in the U.S. economy driving the current trade.

Earlier in the week, a European Union report showed that February Retail Sales were down 0.5 percent and Bayerische Landesbank reported a 4.3 billion euros ($6.7 billion) write down. These are two signs that the Dollar bulls had been waiting for as they indicate that things are not as rosy in the Euro Zone as the ECB leads us to believe. Although Trichet and his cohorts still believe that inflation is the enemy, another bearish report out of the Euro Zone may cause them to think twice.

The chart pattern is indicating a developing double-top formation. Due to the size of the number of longs in the EURUSD, it seems to be taking its time distributing out this top. The true sign of the double top will be a break through the last main bottom at 1.5341. This action will turn the main trend to down on the Euro chart with a possible retracement to 1.517.

The Canadian Dollar failed in its attempt to post a fifth straight day of gains against the USD. A weak job growth report on Friday triggered profit taking and a selloff. Talk of a 50 bp cut in rates by the Bank of Canada surfaced again. Overall the Canadian economy is tied too closely to the U.S. economy to be anything but weak. The rally for four out of five days was crude oil driven. Fridays action indicates that the market sees the economy as a more important factor in determining the strength of the Loonie. Continue to look for choppy two-sided trading as the USDCAD bulls buy dips in anticipation of an economic slowdown, while the bears sell the rallies on the strength in the crude oil.

It was a dismal week for the GBPUSD. Although the market did have a short-covering rally, it was not enough to turn the trend to up. The weakness in the Pound is split between the anticipation of more bank write downs and the threat of a weak economy. The Bayerische Landesbank news from Germany is not good news for the GBPUSD. The U.S. financial problems seem to have parked themselves in the U.K.

The main top in the GBPUSD is 2.1093. The market has to take this price out to turn the trend back to up. Until this takes place, continue to sell rallies. The first upside zone to sell is 1.9961 to 2.0015. The next downside target is 1.9660.

The USDCHF traded in a relatively tight range last week as traders could not commit very heavily to the stock market, thereby keeping the price of the CHF in check. Long-term traders see more downside as the U.S. economic problems will not go away fast. U.S. equity traders see it another way as they try to muster enough buying power to trigger an upside breakout. A strong stock market will trigger a USDCHF rally. Until this upside breakout occurs, look for sideways to lower trading. The daily charts indicate this pair is still in the base building stage with a bigger rally to follow on a breakout through 1.025. At this price, the main trend turns up on the daily chart and sets up a further rally to 1.036. Look for support at .9991.

The main trend turned up last week in the USDJPY market. The key resistance prices remain 102.17 and 103.69. If the latter price goes, then look for a quick rally to 104.24. Downside support is at 101.24. A new main bottom was also formed at .9854. With the trend up, look to buy dips if given the opportunity. Rumors are circulating that Japan may be next in line for the sub-prime mess.

The AUDUSD was firm as traders looked at commodities for direction. This market is sensitive to gold at this time. Traders seeking higher yields will be looking to buy the AUDUSD especially if the rates are cut in the U.S. another 50 bp. The only negative at this time are the bearish comments from the Royal Bank of Australia. They indicated last week that rates are expected to remain the same.

The main top is .9254. The charts indicate a move through .9033 could trigger a sharp break on the downside. With the main trend down, look to sell a rally, back to .9220. Make sure you are out of your shorts if .9254 is penetrated.

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