The euro fell against most of its main currency rivals yesterday, as investors remained concerned about how a plan to bring down Spanish and Italian borrowing costs will be implemented. The EUR/GBP hit a 3 ½ year low, while the EUR/AUD fell to its lowest point ever. Turning to today, the weekly US Unemployment Claims figure is likely to be the highlight of the trading day. Following last week’s disappointing Non-Farm Payrolls figure, investors will be eyeing today’s news for additional clues regarding the current state of the US labor sector. Any disappointing data could cause the euro to gain against the greenback.
Forex Market Trends
USD – US Unemployment Claims Set to Generate Market Volatility
The US dollar spent much of the day yesterday in a downward trend against several of its main rivals, as concerns that the Fed could hint at a new round of quantitative easing caused investors to shift their funds away from the greenback. The AUD/USD gained close to 90 pips during the European session and eventually peaked at 1.0280 before staging a correction to stabilize at 1.0250. The EUR/USD moved up close to 50 pips during the first part of the day, eventually reaching as high as 1.2295 before moving back downward. The pair eventually found support at the 1.2260 level.
Turning to today, traders will want to monitor the results of the weekly US Unemployment Claims figure, scheduled to be released at 12:30 GMT. At the moment, analysts are forecasting today’s news to come in at 379K, which if true, would represent a slight increase over last week. Should today’s news come in above expectations, investors may take it as a sign that the US economic recovery is slowing down further, which could result in the dollar taking additional losses during the afternoon session.
EUR – Euro-Zone News Continues to Weigh Down on EUR
The euro fell to new lows against several of its main currency rivals yesterday, as investors grew increasingly concerned that an agreement to lower Spanish and Italian borrowing costs will not be implemented as planned. The EUR/GBP fell close to 40 pips during European trading, eventually reaching the 0.7870 level, a 3 ½ year low. The EUR/AUD extended its bearish trend throughout the day yesterday. The pair dropped over 60 pips, eventually hitting a record low at 1.1945, before staging a mild recovery.
Turning to today, euro traders will want to continue monitoring any developments out of the euro-zone, particularly with regards to Spain and Italy’s rising borrowing costs. Investor fears that either country could soon come to the point where they will need a fresh bailout have caused the euro to remain bearish. Any additional negative news today could reinforce that sentiment and keep the euro near its record lows.
Gold – Gold Sees Modest Gains in Slow News Day
Gold saw moderate gains during European trading yesterday, as a weakened US dollar made the precious metal cheaper for international buyers. That being said, gold was not able to maintain its upward momentum, and once again began falling during the afternoon session. After gaining over $10 during the first part of the day, to trade as high as $1583.14 an ounce, gold dropped to the $1574 level where it was able to stabilize.
Today, gold traders will want to pay attention to the US Unemployment Claims figure, scheduled to be released at 12:30 GMT. If the indicator comes in above expectations, investors may take it as a sign that the US labor sector is weakening further. In such a case, the dollar could fall against its main rivals, which may give gold the opportunity to reverse some of its recent losses.
Crude Oil – Crude Oil Rebounds Due to US Inventories Figure
Oil was able to recoup some of its recent losses yesterday, after the US Crude Oil Inventories figure came in well below its forecasted level. Investors took the news as a sign that demand in the US, the world’s leading oil consuming country, is moving up. Oil traded as high as $85.72 a barrel during afternoon trading, up close to $1.50.
Today, oil traders will want to monitor news out of the US and how it affects the US dollar. Should the greenback see gains against higher yielding currencies, like the euro and AUD, oil could become more expensive for international buyers which may cause the commodity to give back some of yesterday’s gains.
The daily chart’s Williams Percent Range has crossed over into oversold territory, indicating that this pair could see an upward correction in the near future. This theory is supported by the Slow Stochastic on the same chart, which has formed a bullish cross. Going long may be the wise choice.
Most long-term technical indicators place this pair in neutral territory, 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 near future.
While the daily chart’s MACD/OsMA has formed a bearish cross, indicating that this pair could see downward movement in the near future, most other technical indicators show this pair range-trading. Traders may want to take a wait and see approach until a clearer trend can be determined.
The Relative Strength Index on the daily chart has crossed over into overbought territory, indicating that downward movement could occur in the near future. Furthermore, the Slow Stochastic on the same chart has formed a bearish cross. Going short may be the wise choice for this pair.
The Wild Card
A bearish cross appears to be forming on the daily chart’s MACD/OsMA, indicating that upward movement could occur in the near future. This theory is supported by the Williams Percent Range on the same chart, which is currently below the -80 level. This may be a good time for forex traders to open long positions ahead of a possible upward breach.
Written by Forexyard.com