Today’s sample of Forex Analysis from

The U.S. Dollar soared early Friday following a surprise 50 basis point hike in China’s bank reserve rate. Additional strength was provided by a better than expected U.S. Retail Report. The Dollar pared some of its gains after the University of Michigan Survey fell unexpectedly. Forex market trading has been erratic ahead of the week long Chinese holiday and the extended U.S. weekend.

The aggressive move by China is an attempt to cool credit without tightening interest rates. The intention of China’s central bank is not to derail the economy but to preserve its expansion. The easy flow of stimulus money has created a potentially overvalued real estate and housing bubble in China. Friday’s action by China to raise bank reserves by 50 basis points on February 25th is the central bank’s attempt to avoid an asset bubble.

Also contributing to the strong rally in the Dollar was another round of aggressive Euro selling. Poor German and Euro Zone economic data as well as the lack of solid steps by the European Union to help Greece were the bearish forces driving this market lower.

Read full article at as well more Forex Trading articles including Forex Technical Analysis and Forex Education

Disclaimer: Trading foreign exchange on the margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore should not invest money that you cannot afford to lose.