Positive German Data Leads to a Boost for the Euro

The euro reversed some of its recent losses yesterday, as positive German data sent investors to riskier assets throughout European trading. The EUR/USD went as high as 1.3340 before staging a downward correction during the afternoon session. Today, the US New Home Sales figure may generate some volatility to close out the week. Any increase in the home sales figure may lead to USD gains vs. other safe-haven currencies.

Forex Market Trends

Daily Trend up down up up down up
Weekly Trend up down up down up up
Resistance 1.3372 1.5875 80.65 0.9153 1.0796 0.8507
1.3288 1.5820 80.52 0.9124 1.0748 0.8494
1.3236 1.5787 80.30 0.9082 1.0719 0.8455
Support 1.3153 1.5732 80.12 0.9053 1.0671 0.8423
1.3101 1.5699 79.90 0.9021 1.0642 0.8406
1.3016 1.5644 79.76 0.9001 1.0595 0.8378

Economic News

USD – Unemployment Claims Signal Continued Growth in US Labor Sector

The US dollar saw mild gains against several of its main currency rivals yesterday, following a positive Unemployment Claims figure that signaled continued growth in the US labor sector. While both the USD/JPY and USD/CAD saw upward movement after the figure was released, positive euro-zone news earlier in the day caused the greenback to slip against the euro and British pound. The EUR/USD spent most of the day at or above the 1.3300, while the GBP/USD rebounded from the previous day’s bearish trend to reach as high as 1.5730.

As we close out the week, traders will want to pay attention to the US New Home Sales figure, set to be released at 15:00 GMT. Along with employment statistics, the housing market is viewed as one of the primary indicators of US economic health. Any increase in the figure over last month may help the USD against its main currency rivals. That being said, should any positive announcements be released from the euro-zone, investors may return to riskier assets which could lead to a drop for the dollar.

Taking a brief look at next week, traders will want to note that several significant US indicators are scheduled to be released. Particular attention should be given to the Consumer Confidence figure on Tuesday and the Prelim GDP on Wednesday. Should any of the indicators come in above expectations, the dollar may see some gains as a result.

EUR – Euro Unable to Sustain Gains in Trading Yesterday

A better than expected German Ifo Business Climate figure led to a brief euro rally during the beginning of yesterday’s trading session. The EUR/USD was up over 100 pips from the previous night, and reached as high as 1.3340. That being said, news that the euro-zone may sink back into recession this year caused the common-currency to reverse its gains later in the day. The EUR/USD spent much of the day trading below the 1.3300 level, while the EUR/CHF fell as low as 1.2044 during European trading.

Turning to today, EUR movements will likely be determined by any announcements out of the euro-zone. Any further negative news regarding the euro-zone economic recovery could cause investors to abandon riskier assets. The euro could extend its bearish trend as a result. At the same time, should the US New Home Sales figure come in below the expected 316K, the euro may be able to capitalize on the news and move up against the USD.

JPY – Yen Briefly Advances Against USD

The Japanese yen saw brief gains against the USD, after hitting a seven-month low the previous day. The USD/JPY’s downward movement was attributed to profit taking from investors, who view the pair as overbought. A long term upward trend for this pair may only be possible after US interest rates are increased, according to most analysts. The USD/JPY fell as low as 80.03 during European trading before once again rebounding to the 80.25 level.

As we close out the week, yen traders will want to pay attention to the US New Home Sales figure, set to be released at 15:00 GMT. Analysts are forecasting the figure to have gone up over last month’s reading. If true, the USD may be able to advance further on the yen. At the same time, anything below the expected 316K, could help the yen recoup some of its losses.

Crude Oil – Increase in US Inventories Leads to Drop in Price of Oil

The price of crude oil slipped for the first time in six-days yesterday, as an increase in US inventories signaled a decrease in demand. While crude dropped below the $106 a barrel level, it was still priced relatively high, largely due to ongoing tensions between Iran and the West. The commodity dropped as low as $105.60 during European trading.

Turning to today, the price of oil will once again be largely determined by the conflict with Iran. Any indication that Iran could further limit oil exports may send prices higher ahead of markets closing for the week. At the same time, should any additional negative statements regarding the pace of the euro-zone economic recovery be released, the commodity may see its value decline.

Technical News

Daily chart indicators are placing this pair in overbought territory, indicating that downward movement could occur in the near future. A bearish cross has formed on the Slow Stochastic, while the Williams Percent Range is hovering close to the -20 level. Traders may want to go short in their positions.
The Relative Strength Index is moving downward, but has yet to cross into the oversold region. Traders can take this as a sign that the pair has room to extend its bearish correction. This theory is supported by the Slow Stochastic on the same chart, which has recently formed a bearish cross. Traders may want to short their positions for the time being.
This pair’s recent upward trend looks like it still has room to grow. While the weekly chart’s Relative Strength Index has gone up, it has yet to cross over into the overbought zone. Traders may want to continue going long in their positions for the time being.
A bullish cross on the daily chart’s Slow Stochastic indicates that upward movement could occur in the near future. The Williams Percent Range on the same chart, which is currently right around the -80 level, supports this theory. Going long may be a wise choice for traders.

The Wild Card

A bearish cross on the 8-hour chart’s Slow Stochastic indicates that downward movement could occur in the near future. This theory is supported by the Relative Strength Index on the daily chart, which has crossed into the overbought zone. Forex traders may want to go short in their positions today.

Written by Forexyard.com