Risk Taking Results in Broad Euro Gains

The euro saw gains across the board yesterday, after positive comments from an official at the European Central Bank regarding the euro-zone’s ability to combat the region’s debt crisis led to risk taking in the marketplace. At the same time, analysts continued to caution traders that any euro gains may be temporary due to rising Spanish bond yields. Today, US news is likely to create the most market volatility. Traders will want to pay attention to the Core Durable Goods Orders, Unemployment Claims and Pending Home Sales figures. Should any of the news indicate growth in the US economy, the dollar could see gains against the euro during the afternoon session.

Forex Market Trends

Daily Trend up up up down up up
Weekly Trend down down down up down up
Resistance 1.2264 1.5581 79.32 0.9971 1.0424 0.7938
1.2211 1.5530 78.81 0.9923 1.0378 0.7895
1.2178 1.5499 78.49 0.9894 1.0345 0.7868
Support 1.2126 1.5448 77.99 0.9846 1.0295 0.7826
1.2093 1.5418 77.67 0.9816 1.0263 0.7799
1.2039 1.5367 77.16 0.9768 1.0214 0.7756

Economic News

USD – Batch of US Indicators Set to Impact Dollar

The dollar fell against most of its main currency rivals yesterday, following positive euro-zone news which led to risk taking among investors. That being said, analysts were quick to warn that the overall trend for the dollar was still bullish, as global economic news remained negative. Still, the AUD/USD advanced close to 90 pips during the European session, eventually reaching as high as 1.0306. Against the Swiss franc, the dollar tumbled more than 75 pips to trade as low as 0.9867.

Turning to today, dollar traders will want to monitor a batch of US news that could potentially lead to market volatility. At 12:30 GMT, the Core Durable Goods Orders and Unemployment Claims are both scheduled to be released, followed by the Pending Home Sales figure at 14:00. Both the Core Durable Goods Orders and Pending Home Sales are forecasted to come in below last month’s figures. If the news comes in as expected, the greenback could see further losses during the evening session.

EUR – Euro Gains May be Temporary

Positive comments from an official at the European Central Bank regarding the euro-zone’s ability to combat the debt crisis in the region resulted in risk taking in the marketplace, which in turn led to broad gains for the common currency. The EUR/USD was up over 100 pips over the course of the day, reaching as high as high as 1.2169 before staging a downward reversal. The pair found support at the 1.2130 level. Against the Japanese yen, the euro saw gains of around 95 pips to peak at 95.18 before correcting itself toward the end of European trading.

Today, euro traders will want to continue monitoring any developments and announcements out of the euro-zone. Analysts are warning that given the current state of the Spanish economy combined with fears that the region’s debt crisis is impacting Germany, any gains the euro makes are likely to be temporary at best. Furthermore, if any of today’s news out of the US shows growth in the American economy, the euro could see losses against the dollar in afternoon trading.

Gold – Gold Advances Past $1600 amid Risk Taking

Risk taking in the marketplace due to positive euro-zone news sent the price of gold up more than $25 an ounce yesterday. A bullish euro typically leads to gains for gold, as it becomes cheaper for international buyers. The precious metal peaked at $1605.83 during mid-day trading before staging a mild downward reversal to stabilize at the $1602 level.

Today, gold traders will want to continue monitoring any developments in the euro-zone, particularly with regards to bond yields in Spain, which recently soared due to aid requests from several regions in the country. Should the euro once again turn bearish today, the price of gold could fall as a result.

Crude Oil – Crude Oil Tumbles Following US Inventories Figure

The price of oil tumbled by well over $1 a barrel during afternoon trading yesterday, after the US Crude Oil Inventories figure came in well above analyst expectations. The US data is typically used by investors to gauge demand in the world’s leading oil consuming country. After falling as low as $87.42 a barrel, crude staged a minor upward correction to reach the $87.60 level.

Turning to today, oil traders will want to pay attention to a batch of US news, set to be released at 12:30 and 14:00 GMT. If any of the data indicates expansion in the US economy, investors may take the news as a sign that oil consumption will increase, which could result in the commodity turning bullish during afternoon trading.

Technical News

The Relative Strength Index on the weekly chart has crossed into oversold territory, indicating that this pair could see upward movement in the coming days. This theory is supported by the Slow Stochastic on the same chart, which is currently forming a bullish cross. Going long may be a wise strategy for this pair.
A bullish cross has formed on the daily chart’s MACD/OsMA, signaling that an upward correction could occur in the near future. Furthermore, the Williams Percent Range on the weekly chart has fallen into oversold territory. Opening long positions may be the right choice for this pair.
While the weekly chart’s Williams Percent Range has dropped into oversold territory, most other long term technical indicators place this pair in the neutral zone. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the near future.
A bearish cross on the weekly chart’s Slow Stochastic appears to be forming, indicating that a downward correction could occur in the near future. Additionally, the Relative Strength Index on the same chart has crossed into overbought territory. Going short may be the wise choice for this pair.

The Wild Card

The Williams Percent Range on the daily chart is currently in oversold territory, indicating that an upward correction could take place in the near future. Furthermore, the Slow Stochastic on the same chart has formed a bullish cross. Forex traders may want to open long positions ahead of a possible upward breach.

Written by Forexyard.com