The GFT Trading Challenge is in full swing. As a result, the forex blogosphere and Twitterverse are buzzing with articles, comments and tweets.

So far, more than 7,000 traders have qualified for the worldwide trading competition that will award more than $100,000 in cash and prizes.

Traders are tracking their rate against the rest of the world’s best traders. Watch the action here!

As part of the contest, GFT is holding a “tweeting contest” to help create even more buzz. GFT revealed yesterday that the first Twitter contest prize giveaway is an iPod Touch® and iTunes gift card worth $150!

So far, more than 2,000 tweets were delivered by more than 300 different people using Twitter. Sign up here.

GFT has also taken a unique approach in Australia, where it worked with one of the largest financial sites, the Bull.com.au, to add a GFT Trading Challenge ‘skin’ around the entire website: see it by clicking here

The popular website in the UK, Economy News, also published a story about the trading contest.

One of the things you can do to help find trends for EUR/USD in forex trading is to look at equities. The way that equities perform often correlates to how well the euro does in forex trading against the U.S. dollar.

Indeed, there is a high correlation, reports GFT's Kathy Lien in  FX360:

In the meantime, currency traders should continue to keep their eyes on equities. Over the past year, there has been an 88 percent positive correlation between EUR/USD and S&P 500. This correlation has increased to 92 percent since the beginning of the year which suggests that if there is no catalyst to move currencies, forex traders will most likely to take their cues from equities. The following chart illustrates the strong correlation between the EUR/USD and S&P 500 over the past few years - there is no reason why the relationship will change this week.

The U.S. dollar is moving lower in forex trading on the currency market today, falling as events in Europe spark risk appetite. Greek rescue hopes are likely to follow ECB president Jean Claude Trichet from Sydney, and that is sparking a rally in high beta currencies.

Also sending the dollar lower is the fact that the sterling and the euro have been oversold in forex trading for sometime, and a natural correction is expected. 

In currency trading, the greenback is also under pressure as oil prices and gold prices head higher. The dollar traditionally moves inversely to these commodities, and it appears that the two are putting pressure on the U.S. dollar in forex trading.

A worldwide online trading contest that started Sunday, Feb. 7, set new benchmarks for the extent of cash and other prizes offered, and linking traders globally through social networking, as well as  giving market speculation expertise greater recognition.

The “GFT Trading Challenge” sets a benchmark for prizes, trading strategies and social networking in a market where the three have never come together such as this.

“We expect a truly worldwide rivalry of thousands of traders to challenge each other for the top prizes, which include prestige, recognition and rewards beyond their profits,” said Gary L. Tilkin, president and CEO, GFT.

With a grand prize of $50,000 cash, GFT hopes to bring a heightened sense of excitement to the financial markets that once were open to very few people. Now, almost anyone can trade forex and other financial derivatives, which is why the company has designed the competition based on profit margin.

“Since the contest is based on an overall percentage, it really levels the playing field for all traders participating. They could start with several thousands of dollars or tens of thousands, but all traders will have a shot to win the cash grand prize,” said Tilkin.

The cash prizes are not the only thing making this competition one for the record books – social networking will be used for the first time in an online contest of this nature, bringing traders around the world together in a way that hasn’t happened before.

All Twitter ‘followers’ of @gftforex, @gftuk or @fx360 who use the hashtag #tradeGFT will be entered to win weekly prizes – to the value of $3,000. As interactive components of the Twitter contest, GFT will deliver a wide range of tweets, including trading tips, questions to spark a dialogue for traders to share ideas, prize clues as well as other breaking news related to both the trading and Twitter contests.

To go even further with prizes, participation and sharing news with the public, GFT plans to offer traders in the challenge an opportunity to win prizes each week they are in the contest (at random). Five others who remain eligible throughout the contest will receive consolation prizes (together, the total value of weekly and consolation prizes is over $8,000).

In the U.S., the contest will involve trading forex in an attempt to profit from exchange rate differences. Outside of the U.S., in Europe, Asia, Australia or the Middle East, traders will compete in forex or CFDs – the popular derivatives used for trading stocks, indices, commodities and other common financial markets.

“This is the type of competition that will bring traders out into the mainstream and give them the full recognition they deserve as they see how their skills match up against other traders,” said Tilkin.

All worldwide contestants are able to track their position, as well as competitor locations, on an official Challenge leaderboard as they compete against fellow traders for big winnings. The leaderboard will be updated daily, reflecting the individual's total percentage gain

GFT will award three cash prizes: $50,000 for first place; $25,000 for second place and $10,000 for third place. Fourth- and fifth-place winners will receive upgrades applied to their GFT trading account, each worth over $2,500–combined with the weekly consolation and giveaway prizes the total prize payout is over $100,000 (USD).

The GFT Trading Challenge kicks off today and runs until April 30, 2010 (ET), giving traders and tweeters nearly three months to compete for prizes, prestige and cash. Visit the official “GFT Trading Challenge” website by clicking here.

The euro is rebounding in forex trading on the currency market today. The 16-nation currency is showing some strength after a couple weeks of taking a beating. Indeed, even with sovereign debt concerns of euro zone nations, EUR/USD is moving higher in currency trading.

GFT's Boris Schlossberg offers some insight in FX360 as to why the euro is showing some strength in forex trading:

As we noted earlier,” Although the euro remains pressured by the political and fiscal upheaval in the union, the currency is now grossly oversold after declining for 12 out of the last 15 days. The latest data from CFTC shows that euro positioning has turned strongly negative with shorts growing to 43.7K contracts from 39.5K the period prior. The increase in shorts is now at a record in the series and argues for some sort of technical bounce as late comers get squeezed.” The push higher was led by Russians, who are typically very adroit traders of inflection points in the FX market and suggests that for now the EUR/USD may have found a temporary bottom at the 1.3600 level.

With the U.S. dollar expected to fall back some this week, and with the euro being oversold to the point where a correction is needed, it looks like things could change -- at least temporarily -- for the euro in forex trading.

The forex trading forecast for the U.S. dollar looks to be a bit staid for the coming week. With very little economic data set to be released, it is small surprise that the greenback is expected to be reasonably quiet in currency trading on the FX market.

Another issue is the fact that the U.S. dollar has been doing so well recently, thanks to its safe haven status. Dollar bulls may be pleased, but the fact is that it is probably time for some sort of correction as investors explore their options.

It will be interesting to see what the coming week brings. Already the euro is showing signs of life in forex trading, and that may mean a bit of a drop in the forecast for the U.S. dollar.