To be able to trade Forex, it is necessary to be in tune with the news every day. Knowing what is happening in the world can help traders to make good decisions; according to Reuters it is a good idea to be cautious with the dollar. Also mentioned in the report, the dollar fell to a five-week low against a basket of major currencies on Friday (26-07-2013) on concerns that possible tweaks to the Federal Reserve's forward guidance next week could keep interest rates lower for longer.
The dollar index fell 0.5 percent to 81.579, its lowest since June 20, just above chart support at 81.50 – its 200-day moving average and the 76.4 percent retracement of its June to early July rally.
Traders said that a Wall Street Journal report that the U.S. central bank may debate changing its forward guidance to emphasize that it will keep rates low for a long time prompted investors to trim bets on the dollar gaining.
The latest falls caused the dollar to resume a slide that had begun on July 10, when the minutes of the Fed's June meeting gave investors second thoughts about when the bank would start reducing the stimulus. Next week's Fed meeting ends on Wednesday. For those whom trade Forex, the results of the meeting might be important.
According to the report, the euro rose to a five-week peak of $1.32975, helped by this week's solid euro zone purchasing managers' surveys. More gains could see it target the mid-June high of $1.34175.Having this in mind to trade Forex can be useful.
The euro is around 10 percent higher against the dollar since ECB President Mario Draghi vowed a year ago to do "whatever it takes" to save the single currency, calming investors' fears about the euro zone breaking up. The dollar fell 0.8 percent to a two-week low of 98.485 yen, close to the chart support at the July 11 low of 98.20 yen.
But the U.S. currency is expected to be well supported over the coming weeks on expectations the Fed will scale back asset purchases under its quantitative easing program soon, perhaps as early as September. For now according to the report the main focus to trade Forex this coming week –the week of the 29th of July- should be the U.S jobs data on Friday – 3rd of August.