The euro maintained its upward trend against the US dollar on Friday, as a string of positive comments from euro-zone officials last week helped boost risk appetite in the marketplace. Precious metals and commodities were also able to benefit from the risk taking. Both silver and gold, as well as crude oil, recorded gains throughout the second half of the week. This week, traders should anticipate heavy volatility as a batch of euro-zone and American news is scheduled to be released. In addition to a ten-year bond auction out of Italy today, traders will also want to pay attention to Thursday’s ECB Minimum Bid Rate as well as Friday’s all important US Non-Farm Payrolls figure.
Forex Market Trends
USD – US Employment Data Set to Impact USD This Week
Risk taking in the marketplace resulted in losses for the safe-haven US dollar on Friday. Additionally, a slowdown in the US economy, highlighted by the US Advance GDP figure, contributed to the greenback’s bearish trend. The USD/CHF dropped over 100 pips during European trading, eventually reaching as low as 0.9694. The pair was able to stage a minor correction during the evening session to close out the week at 0.9750. Against the Japanese yen, the dollar started off the day on a strong note, gaining close to 60 pips to trade as high as 78.66. That being said, the greenback was not able to maintain the bullish trend and ended the week at 78.47.
This week, dollar traders will want to pay attention to a series of news events out of the US. Tuesday’s CB Consumer Confidence, followed by Wednesday’s ADP Non-Farm Employment Change and Thursday’s Unemployment Claims figure could all lead to further dollar losses if they signal a further slowdown in the US economy. Finally, the all important US Non-Farm Payrolls figure will be released on Friday. The indicator is widely considered the most important indicator on the forex calendar and traders should anticipate volatility across the board as a result.
EUR – Euro-Zone News May Result in EUR Losses This Week
The euro was able to maintain its bullish trend on Friday, as risk taking in the marketplace received a boost due to positive comments from euro-zone officials earlier in the week. The EUR/USD climbed close to 150 pips during the first half of the day, eventually reaching as high as 1.2389 before correcting itself to close out the week at 1.2315. Against the Japanese yen, the common-currency advanced close to 165 pips, peaking at 97.32 before turning bearish to finish out the day at 96.65.
This week, traders will want to pay attention to several potentially significant euro-zone indicators. Today, the Italian ten-year bond auction is likely to be the highlight of the trading day. Should demand for Italian bonds come in below expectations, the euro could reverse some of its recent gains. Wednesday’s Spanish Manufacturing PMI, followed by ECB Minimum Bid Rate and Press Conference on Thursday could also generate volatility for the common-currency, especially if they signal a slowdown in the euro-zone economic recovery.
Gold – Gold Extends Upward Trend
Gold extended its upward trend on Friday, as positive signs out of the euro-zone combined with an economic slowdown in the US, boosted appeal for the precious metal. After climbing close to $18 an ounce during the first half of the day to trade as high as $1629.09, gold moved downward to finish out the week at $1622.83.
This week, gold is forecasted to see a fair amount of volatility, as significant euro-zone and American news is scheduled to be released. Traders will want to pay particular attention to the US ADP Non-Farm Employment Change on Wednesday and Friday’s US Non-Farm Payrolls. If either of the indicators signals a further downward trend in the US economic recovery, gold could see gains as a result.
Crude Oil – Crude Oil Gains for 4th Day Straight
Crude oil extended its bullish trend for the fourth day straight on Friday, as positive euro-zone news outweighed disappointing US indicators and resulted in risk taking in the marketplace. Oil advanced as high as $90.38 during afternoon trading, up close to $1 a barrel for the day. The commodity ended up finishing out the week at $90.11.
This week, euro-zone indicators are likely to dictate which direction oil takes. Traders will want to pay close attention to today’s Italian ten-year bond auction, as well as Thursday’s ECB Minimum Bid Rate and Press Conference. If any of the news signals additional economic troubles for the EU, oil could reverse some of its recent gains.
The Williams Percent Range on the weekly chart has crossed into the oversold zone, indicating that this pair could see upward movement in the near future. Furthermore, the Bollinger Bands on the daily chart are narrowing, signaling that a price shift could occur in the near future. Going long may be the smart choice for this pair.
A bullish cross appears to be forming on the weekly chart’s MACD/OsMA, signaling that an upward trend could occur in the coming days. That being said, most other technical indicators show this pair range trading. Traders may want to take a wait and see approach for this pair.
The Bollinger Bands on the daily chart are narrowing, indicating that this pair could see a price shift in the near future. Additionally, the Williams Percent Range on the weekly chart appears close to dropping into oversold territory. Traders will want to monitor the Williams Percent Range. Should it drop below the -80 level, it may be time to open long positions.
A bearish cross on the weekly chart’s Slow Stochastic indicates that this pair could see downward movement in the coming days. Furthermore, the Williams Percent Range on the same chart has crossed into overbought territory. Going short may be the wise choice today.
The Wild Card
The Relative Strength Index on the daily chart has crossed into overbought territory, signaling that a downward correction could occur in the near future. Furthermore, the Slow Stochastic on the same chart has formed a bearish cross. Forex traders may want to open short positions ahead of a possible downward breach.
Written by Forexyard.com