The euro fell against virtually all of its main currency rivals during the European session yesterday, after pessimistic comments from German Chancellor Merkel led to risk aversion in the marketplace. Turning to today, several potentially significant US economic indicators are scheduled to be released. Traders will want to note the results of the Unemployment Claims figure at 12:30 GMT, followed by the Existing Home Sales and Philly Fed Manufacturing Index at 14:00. Should any of the indicators show growth in the US economy, the euro could see additional losses against the US dollar in afternoon trading.
Forex Market Trends
USD – US Unemployment Claims Set to Generate Market Volatility
The dollar saw significant activity in the marketplace yesterday, following euro-zone news which led to risk aversion among investors. The USD/CHF shot up over 50 pips during the morning session, eventually peaking at 0.9828 before staging a downward correction. The pair eventually found support at the 0.9800 level. Against the British pound, the greenback gained more than 80 pips during early morning trading. That being said, sterling was able to recover during the second half of the day and eventually moved up close to 50 pips to trade as high as 1.5645.
Turning to today, dollar traders will want to pay attention to several US indicators scheduled to be released during mid-day trading. The Unemployment Claims, Existing Home Sales and Philly Fed Manufacturing Index are all known to create market volatility. While the Unemployment Claims figure is forecasted to come in higher than last week, which could result in losses for the greenback, both the Existing Home Sales and Philly Fed Manufacturing Index are expected to show gains in the US real estate and manufacturing sectors. Should the indicators come in at their forecasted levels, the dollar could see gains against its main currency rivals during afternoon trading.
EUR – EUR/AUD Hits Record Low
The euro hit a record low against the Australian dollar yesterday, following pessimistic comments from German Chancellor Angela Merkel regarding the euro-zone. The EUR/AUD fell more than 65 pips during European trading, eventually reaching as low as 1.1852. The pair was then able to stage a modest recovery before stabilizing at the 1.1865 level. Against the US dollar, the euro sank more than 80 pips to reach as low as 1.2216. The common currency was able to correct itself, and eventually leveled out at 1.2250.
Today, traders will want to continue monitoring any announcements out of the euro-zone. As we saw yesterday, comments from leaders in the region can have a significant impact throughout the marketplace. Any additional pessimism among German leaders could result in heavy euro losses. In addition, the euro could see some volatility as a result of US news. Should any of the US economic indicators scheduled to be released today come in better than forecasted, the euro could take additional losses against the greenback.
Gold – Gold Sees Mixed Trading Day
Gold saw heavy volatility yesterday, as risk aversion in the marketplace led to losses for the precious metal during morning trading. The price of gold fell by more than $17 an ounce, reaching as low as $1567.56, before correcting itself during the afternoon session and stabilizing around the $1578 level.
Today, gold traders will want to monitor developments out of the euro-zone. The markets have become very sensitive to comments from euro-zone leaders regarding the region’s debt crisis. Any additional pessimistic comments today could result in gold sinking further during European trading.
Crude Oil – Oil Extends Gains Following US Inventories Report
Crude oil moved up more than $1 a barrel yesterday, as the combination of ongoing tensions with Iran and higher than expected demand in the US, drove prices higher. The US Crude Oil Inventories figure came in at -0.8M, well below the forecasted 0.5M. As a result, the price of oil jumped as high as $90.24 a barrel during the afternoon session.
Turning to today, oil traders will want to pay attention to a batch of US news, scheduled to be released at 12:30 and 14:00 GMT. Should any of the data show improvements in the US economy, the dollar could see gains as a result, in which case oil may reverse its recent gains as it would make the commodity more expensive for international buyers.
The Williams Percent Range on the weekly chart has fallen into oversold territory, indicating that this pair could see an upward correction in the near future. Additionally, the daily chart’s MACD/OsMA appears to be forming a bullish cross. This may be a good time to open long positions.
Most long-term technical indicators place this pair in neutral territory, meaning that no defined trend can be established 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.
The daily chart’s Slow Stochastic has formed a bullish cross, indicating that this pair could see an upward correction in the near future. Furthermore, the Williams Percent Range on the same chart has dropped into the oversold zone. Opening long positions may be the wise choice for this pair.
The Relative Strength Index on the weekly chart is approaching overbought territory, indicating that this pair could see a downward correction in the coming days. Furthermore, the daily chart’s Williams Percent Range has crossed above the -20 level. Traders may want to open short positions for this pair.
The Wild Card
The daily chart’s Relative Strength Index has dropped into oversold territory, indicating that this pair could see an upward correction in the near future. Furthermore, the Slow Stochastic on the same chart appears to be forming a bearish cross. This may be a good time for forex traders to open long positions ahead of possible upward movement.
Written by Forexyard.com