Bearish Dollar Will Try and Recover Losses Today

Following yesterday’s bearish downturn for the U.S. Dollar, the greenback will try and recover some of its losses with the help of several critical economic indicators today. Both the U.S. Trade Balance Report and this week’s unemployment claims are likely to have an impact on Dollar positions. Whether or not they can provide USD with the necessary momentum to reverse its current direction is yet to be known.

Economic News

USD – Dollar Stuck in Downward Trend Ahead of Busy Trading Day

After taking some serious losses against several of its major counterparts in trading yesterday, the Dollar remains in its bearish cycle as investor risk appetite has returned. EUR/USD shot up over 50 pips yesterday before slightly retreating to its current level of 1.3635. GBP/USD made similar gains, increasing over 60 pips throughout the afternoon. The pair is currently trading at 1.4955. In overnight trading, the Yen continued to make gains on the greenback with the pair currently trading around the 90.28 level.

Analysts do not appear to be optimistic about the Dollar’s prospects in trading today. At 13:30 GMT, both the U.S. and Canadian trade balance figures are set to be released. While positive figures are forecasted for Canada, the U.S. will likely have a negative trade figure. If the predictions are true, traders can expect USD/CAD to go down in afternoon trading.

Also set to be released today are the weekly American unemployment figures. Analysts are cautiously optimistic regarding the current employment situation in the U.S., and they are currently forecasting a figure of around 456K. If true, this would signal a slight improvement over last week, and may lead to a slight Dollar rebound. Still, various Chinese indicators continue to stir risk appetite among investors. Forex traders will want to pay careful attention to their Dollar pairs as the day progresses.

EUR – Euro Attempts to Maintain Gains on Dollar and Yen

With risk taking apparently on the rise, the Euro is currently capitalizing on the global economic climate and maintaining its gains against its major rivals. The Euro was bullish throughout the day yesterday, and faired particularly well against the Yen. EUR/JPY, up over 100 pips from this time yesterday, is currently trading around the 123.19 level. Comments yesterday from European officials regarding Greece gave the impression that the current debt crisis may finally be coming to an end.

Today, there are no significant Euro news events. Still, that does not mean that Euro pairs will not see some activity in trading today. The British Consumer Inflation Expectation Report as well as the Swiss short-term interest rate report will likely lead to volatility for both the EUR/GBP and EUR/CHF pairs. Traders will want to pay particular attention to the Swiss report, as CHF has been performing fairly well against the Euro as of late.

JPY – Yen Takes Losses Following Bank Announcement

Following yesterday’s announcement that the Japanese central bank may ease monetary policy in the coming weeks, the Yen traded bearish against several of its counterparts throughout the day. USD/JPY moved up in afternoon trading before retreating slightly to its current level of 90.32. CHF/JPY shot up over 100 pips throughout the day yesterday before correcting itself. At this time, the pair is trading around the 84.35 level.

Today, the Yen will likely maintain its current course, especially as risk taking seems to be the predominant sentiment among investors. Still, if the negative forecasts regarding the U.S. Trade Balance Report prove true, JPY could make some gains in afternoon trading against the greenback.

Crude Oil – Oil Prices Fall as Stockpiles Remain High

Crude oil prices fell dramatically to their current level of $81.55, following OPEC’s announcement that it will continue to pump above its stated quota for the foreseeable future. The announcement caused Crude to fall, largely out of fears that supplies would remain high for the time being. Yesterday, prices rallied after U.S. crude inventories came in slightly lower then expected. The commodity was not able to maintain its bullish trend, and subsequently fell in evening and overnight trading.

Today, the price of crude will largely be determined by which way the Dollar moves. If USD is able to recoup some of its losses from yesterday, traders can expect oil prices to continue to fall. On the other hand, if the greenback continues to fall, crude may see an upward correction.

Technical News

The daily chart is showing mixed signals with its Slow Stochastic fluctuating at the neutral territory. However, the weekly Chart’s RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. When the upward breach occurs, going long with tight stops appears to be preferable strategy.
The price of this pair appears to be floating in the over-sold territory on the weekly chart’s RSI indicating an upward correction may be imminent. The upward direction on the daily chart’s Momentum oscillator also supports this notion. Going long with tight stops appears to be preferable strategy.
The typical range trading on the 4-hour chart continues. The weekly chart RSI is floating in neutral territory. However, there is a bearish cross forming on the daily chart’s Slow Stochastic indicating a bearish correction might take place in the nearest future. Going short might be a wise choice.
The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic providing us with mixed signals. The 4 hour charts do not provide a clear direction as well. Waiting for a clearer sign on the hourlies chart might be a good strategy today.

The Wild Card

Gold prices are once again dropping, and it is currently traded around $1107.45 an ounce. And now, the 8-hour chart’s RSI is giving bullish signals, indicating that gold prices might go up. This might give forex traders a great opportunity to enter a very popular trend.

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