High Spanish Borrowing Costs Lead to Further EUR Losses

The euro fell once again vs. its main currency rivals yesterday, as a sharp increase in Spanish borrowing costs combined with expectations that the upcoming EU summit will do little to combat the euro-zone debt crisis, weighed down on the common currency. Today, traders will want to pay attention to a batch of US news that has the potential to generate market volatility. The Core Durable Goods Orders at 12:30 GMT, followed by the Pending Home Sales figure at 14:00, are both expected to signal growth in the US economy, which if true, could lead to further euro losses against the USD.

Forex Market Trends

Daily Trend down up down up up down
Weekly Trend down up down up no down
Resistance 1.2580 1.5715 80.25 0.9690 1.0155 0.8075
1.2560 1.5695 80.05 0.9670 1.0125 0.8055
1.2530 1.5665 79.75 0.9640 1.0095 0.8025
Support 1.2470 1.5605 79.15 0.9580 1.0035 0.7965
1.2440 1.5575 78.85 0.9550 1.0005 0.7935
1.2420 1.5555 78.65 0.9530 0.9985 0.7915

Economic News

USD – Dollar Sees Additional Gains vs. EUR

The US dollar advanced further against the euro in trading yesterday, as low expectations for an upcoming summit of EU leaders in addition to general concerns regarding the global economic recovery caused investors to keep their funds with safe-haven assets. The EUR/USD fell over 70 pips during mid-day trading, reaching as low as 1.2455 before staging a slight recovery and settling at 1.2490. The greenback was not as fortunate against the JPY. The USD/JPY dropped close to 50 pips over the course of the day, eventually hitting 79.22 before bouncing back to settle around the 79.50 level.

Turning to today, dollar traders will want to pay attention to a batch of US news, including the Core Durable Goods and Pending Home Sales figures, each of which is considered an accurate gauge of overall economic health. Both indicators are forecasted to come in significantly higher than last month’s results. If true, the dollar could recoup some of its losses against the yen during the afternoon session and possibly extend its bullish trend against its higher-yielding currency rivals.

EUR – EUR Hits 4-Week Low vs. GBP

The euro tumbled to its lowest level in a month against the British pound yesterday, as rising borrowing costs in Spain and the recent news that Cyprus has requested a euro-zone bailout led to further losses for the common currency. The EUR/GBP fell over 40 pips during European trading, eventually reaching as low as 0.7983 before bouncing back to the 0.8000 level. Against the JPY, the euro dropped to a two-week low, eventually hitting 98.73 during the mid-day session.

Today, analysts are warning that the euro could see additional losses if investors remain pessimistic regarding the prospects that an EU summit later this week will lead to new ideas to stimulate growth in the euro-zone. That being said, traders will want to pay attention to the German Prelim CPI figure. As a key indicator of consumer inflation in Germany, the figure could lead to short-term gains for the euro if it comes in above the forecasted level of 0.0%.

Gold – Gold Tumbles as USD Turns Bullish

The price of gold fell during European trading yesterday, as a strengthening US dollar made the precious metal more expensive for international buyers. Gold fell close to $20 an ounce over the course of the day, eventually reaching as low as $1567.58 toward the beginning of the afternoon session.

Today, gold traders will want to monitor a batch of US news, set to be released at 12:30 and 14:00 GMT. Should the news signal growth in the US economy, the greenback could see additional gains during the afternoon session, which could cause the price of gold to fall further. In addition, if any disappointing euro-zone news is released today, the dollar could extend its bullish trend, which may lead to further losses for gold.

Crude Oil – Oil Remains Low amid Global Economic Concerns

Crude oil spent much of the European session range trading yesterday, as fears regarding the pace of the global economic recovery kept the commodity close to its recent lows. By the end of afternoon trading, crude was trading just below the $79 a barrel level

Today, oil is likely to see significant movement following the release of this week’s US inventories figure at 14:30 GMT. Analysts are forecasting that crude stockpiles in the US fell by 700,000 barrels last week, which if true, may be taken as a sign that demand for oil is going up among American consumers and cause the price of oil to go up. At the same time, the US inventories figure has consistently come in above expectations in recent weeks. Should that occur again today, oil could see further losses during the afternoon session.

Technical News

Both the Relative Strength Index and the Williams Percent Range on the weekly chart are very close to dropping into oversold territory, signaling that an upward correction could take place in the coming days. Traders will want to keep an eye on both of these indicators. Should they drop further, it may be a sign to open long positions.
Long-term technical indicators show this pair range-trading, meaning that no defined trend can be predicted at this time. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the coming days.
The daily chart’s Slow Stochastic has formed a bearish cross, indicating that downward movement could occur in the near future. Additionally, the Williams Percent Range on the same chart is currently in the overbought zone. Opening short positions may be a wise choice for this pair.
The weekly chart’s Williams Percent Range is approaching overbought territory, indicating that a downward correction could take place in the near future. This theory is supported by the Relative Strength Index on the same chart, which is currently near 70. Going short may be the wise choice for this pair.

The Wild Card

The daily chart’s MACD/OsMA has formed a bullish cross, indicating that an upward correction could occur in the near future. Furthermore, the Williams Percent Range on the same chart has dropped below the -80 line. Forex traders may want to open long positions ahead of a possible upward correction.

Written by Forexyard.com