Yesterday, the greenback saw bullish trends against most of its major counterparts following positive economic news from the U.S. The EUR\USD was traded as low as 1.5620. The USD was also bullish against the rest of the major currencies. The greenback’s daily momentum was driven by the better than forecasted Core Durable Goods Orders and general Durable Goods Orders, as both beat forecasts by at least 1%.
The USD’s bullish trend yesterday quickly developed after the news announcements regarding the Durable Goods Orders. Experts predicted the results to be worse than last month, but in both cases the actual results beat forecasts and in the Durable Goods Orders, the result was actually better than last month’s result. The other main factor that led to the incline in the greenback’s value was the fall of the Crude Oil’s price, which breached under the $127 range. As the American economy is greatly affected by the Crude Oil’s price, the latest decline in the price of Crude Oil has finally taken some pressure off the USD.
Today will be a very active trading day for the USD, as there are a lot of news announcements expected from the U.S. The first major economic news event will be the Preliminary Quarterly GDP for the 1st quarter, which is expected to rise by 0.3% from last quarter’s result. Traders should be aware of the increase in Unemployment Claims expected to be announced as well. Crude Oil Inventories and the Natural Gas Storage announcements are not expected to cause a major impact on the USD as there are both inflationary and growth implications to the results. In the evening the greenback’s volatility should increase even more as both Fed Chairman Bernanke and Fed Vice Chairman Kohn will hold speeches in different events and times.
As there are many news announcements expected today, the USD’s trading will be very active and volatile. Results are expected to be mixed, as it seems that the main positive announcements will be the Preliminary Quarterly GDP which should give the USD momentum. The wild card will be Bernanke and Kohn’s speeches which will determine the USD’s trend.
The Euro finished yesterday’s trading session with mixed results. The EUR lost to the USD and GBP, but it seems like this occurred mostly because of those currencies’ bullishness and not the EUR’s bearishness. On the other hand, the EUR gained versus the JPY and the CHF. The EUR’s success versus some of its rivals resulted from the better than expected German CPI and German Import Price. Not only were both German results forecasted to be better than before, they actually beat the positive expectations by 0.3%. However, it seems like lately the EUR has been the Crude Oil’s biggest ally and as the Crude Oil’s price dropped yesterday, the EUR was negatively affected as well. The main news announcements expected today from the Euro-Zone are the German Unemployment Change and the M3 Money Supply. As Germany’s economy affects the EUR greatly, the Unemployment Change forecasted seems positive and should cause the EUR to see some bullish momentum; The M3 Money Supply is not expected to change from the previous result and shouldn’t cause much change in the EUR value. There will be many news releases from the Japanese, American and British economies and the EUR’s trends against those currency rivals should be affected mostly by those respective currencies. It might seem like a good trading day for the EUR based on forecasts for news results from the Euro-Zone; however, positive news releases are also expected from other currencies and some of those rival news releases might have a major impact on the final trends of the EUR.
The Japanese Yen fell yesterday versus the major currencies. The JPY saw bearish momentum because of its rivals’ positive news releases and its own worse than expected news releases. The Retail Sales and Large Retailers’ Sales actual results were lower than the previous results and were even lower than the negative forecasts
Today, the JPY’s value versus other currency pairs will be affected by their respective trends until 11:15 GMT. During this hour, there will be many news announcements that should affect the Yen. The major releases will be the Core CPI, Industrial Production and Unemployment Rate. Forecasts of these releases are expecting mixed results and it is unclear how the Yen will react.
Trader should keep close attention to the JPY during the news filled late night hours. Positive results should help the JPY get out of its recent drought; however negative results will lead to a continuation in its bearish momentum.
The 1 hour chart is showing a stable and consistent downtrend corrective movement that shows no signs of stopping any time soon. The RSI is floating near the 50 level pointing to the continuation of the bearish movement. There is also a very distinct pattern forming on the 4 hour Slow Stochastic chart in the shape of a triple top with negative slope, indicating some bearish movement today. Going short with tight stops might be the right way to go today.
The bearish price movement continues at full steam within the bearish channel which still has yet to be breached on the hourlies. The Slow Stochastic is showing a negative slope on the daily chart, and it appears that the bearish trend will continue. Going short might be a very wise choice today.
The 4 hour chart is showing moderate bullish momentum as the Slow Stochastic shows no crosses and is floating around the 50 level. The range trading on the hourlies is forming into a narrowing bullish channel. The pair is approaching the upper level of it, and with the very tight Bollinger Bands, the possible test of the 105.50 appears to be quite imminent. Traders must pay attention for a possible breach which could create a great sell signal.
The corrective bullish momentum created by the breach through the channel on the 4 hour chart appears to be continuing. The Slow Stochastic of the 4 hour chart is showing a positive slope, and the RSI is floating near the 60 level, which indicates that the pair still has more room to run. The first target price might be 1.0474.
The Wild Card
Gold broke the 900.00 support level. Gold is in a downtrend supported by the 1 Hour Exponential Moving Average. Bollinger Bands are widened indicating increased volatility. We should expect to see a bearish configuration today. The target is expected to hit 890. This provides forex traders with an opportunity to go short on a relatively healthy downtrend.
Written by: Forexyard.com