The US dollar fell against the Japanese yen during afternoon trading yesterday, after several US indicators came in below analyst forecasts. The USD/JPY dropped over 30 pips following the news, eventually reaching as low as 79.33. Turning to today, traders will want to pay attention to the US Core CPI and Unemployment Claims figures. Should either of them come in above expectations, the greenback could recoup some of yesterday’s losses. At the same time, if the US news once again disappoints, the dollar may extend its bearish trend.
Forex Market Trends
USD – US Core CPI Set to Impact Dollar
The US dollar saw very little movement against its main currency rivals during the first part of the day yesterday. The EUR/USD spent much of the day around the 1.2525 level, while the AUD/USD held steady around 0.9970. That being said, negative US news during mid-day trading resulted in the greenback sliding against the safe-haven Japanese yen. The US Retail Sales figure declined for the second straight month in May, in yet another sign that the US economic recovery is slowing down. Furthermore, the US Core Retail Sales and PPI both came in below expectations.
Turning to today, dollar traders will want to note the results of the US Core CPI and Unemployment Claims figures, both scheduled to be announced at 12:30 GMT. Analysts are currently forecasting both indicators to come in at the same level as their previous respective results. If true, the dollar may be able to recoup some of yesterday’s losses against the yen. That being said, if news out of the US once again disappoints, the yen may receive an additional boost against the greenback.
EUR – Italian Bond Sale May Create Euro Volatility
The euro traded steadily against most of its main currency rivals throughout the day yesterday, as investors remain hesitant to open new positions ahead of elections in Greece on Sunday. The EUR/JPY took slight losses during mid-day trading, falling from a high of 99.99 to 99.28. The pair eventually stabilized around the 99.55 level. Against the British pound, the euro was able to gain close to 20 pips, eventually reaching as high as 0.8072 before seeing a slight downward correction to stabilize at 0.8065.
Today, euro traders will want to pay attention to the results of an Italian bond auction. Investors will be closely watching the auction, as it is likely to provide clues as to whether the euro-zone debt crisis is spreading beyond Spain. Furthermore, with elections in Greece quickly approaching, news out of that country could lead to euro volatility. Any signs that anti-austerity political parties could win on Sunday may result in the common-currency taking losses against its safe-haven currency rivals.
Gold – Gold Spikes Following Disappointing US News
Risk aversion in the marketplace following disappointing US news during mid-day trading yesterday caused the price of gold to spike over $10 an ounce, eventually reaching as high as $1621. Investors fearing that the US economic recovery in the US is slowing down have chosen to place their funds in gold, as it is now viewed as a safe-haven asset.
Today, traders will want to pay attention to the US Core CPI and weekly Unemployment Claims figures, as they are likely going to provide valuable clues as to the current state of the US economy. Should the news once again come in below expectations, gold may extend yesterday’s gains. At the same time, if either of the indicators comes in above their predicted levels, gold could turn bearish during afternoon trading.
Crude Oil – Crude Oil Rebounds in Afternoon Trading
The price of crude oil fell during mid-day trading yesterday, eventually reaching as low as $82.12 a barrel, following disappointing news out of the US which once again led to fears that demand in the world’s largest oil consuming country would go down. That being said, the price of oil was able to rebound later in the day, increasing by over $1 to trade as high as $83.80.
Turning to today, crude oil traders will once again want to pay attention to US news. Should the Core CPI figure, set to be released at 12:30 GMT, come in below expectations, the price of oil may see some short-term losses during afternoon trading. That being said, any better than expected news could boost risk appetite, which in turn may help oil turn bullish.
While the Bollinger Bands on the daily chart are narrowing, indicating that a price shift could occur in the near future, most other technical indicators show this pair trading in neutral territory. Taking a wait and see approach may be the best option for traders.
A bullish cross on the weekly chart’s Slow Stochastic indicates that this pair could see an upward correction in the coming days. In addition, the Williams Percent Range on the same chart is currently close to dropping into oversold territory. Traders will want to pay attention to this indicator. If it falls below -80, it may be a good time to open long positions.
The daily chart’s Slow Stochastic has formed a bearish cross, indicating that downward movement could occur in the near future. This theory is supported by the Williams Percent Range on the same chart, which has crossed into overbought territory. Opening short positions may be the wise choice for this pair.
While a bearish cross has formed on the weekly chart’s Slow Stochastic, most other technical indicators show this pair range-trading, meaning that no defined trend can be predicted at this time. Taking a wait and see approach may be the best choice for this pair, as a clearer picture could present itself in the near future.
The Wild Card
The Williams Percent Range on the daily chart has fallen into oversold territory, meaning that an upward correction could occur in the near future. Furthermore, a bullish cross has formed on the same chart’s Slow Stochastic, making this a good time for forex traders to open long positions ahead of possible upward movement.
Written by Forexyard.com