Euro-Zone Worries Bring EUR/USD to Two-Week Low

The euro dropped to a two-week low against the US dollar during European trading yesterday, as ongoing fears regarding Greece’s upcoming debt swap have boosted safe-haven assets. Other riskier currencies, like the AUD, tumbled throughout the day as well. The AUD/USD dropped over 100 pips yesterday, to reach a one-month low at 1.0571. Today, in addition to any announcements out of the euro-zone, traders will want to pay attention to the US ADP Non-Farm Employment Change figure. A better than expected figure could help the USD extend its recent gains.

Forex Market Trends

Daily Trend up up up down up up
Weekly Trend down down down up down up
Resistance 1.3299 1.5864 81.79 0.9268 1.0667 0.8431
1.3222 1.5812 81.35 0.9218 1.0617 0.8394
1.3175 1.5780 81.07 0.9187 1.0586 0.8372
Support 1.3099 1.5727 80.63 0.9136 1.0537 0.8335
1.3052 1.5695 80.36 0.9105 1.0506 0.8312
1.2976 1.5643 79.91 0.9055 1.0456 0.8276

Economic News

USD – US ADP Non-Farms Figure Likely to Generate Volatility Today

The US dollar shot up against most of its main currency rivals yesterday, as an increase in risk aversion helped boost the safe-haven currency. Fears regarding the upcoming Greek debt swap sent the EUR/USD to a two-week low at 1.3129, while the NZD/USD hit a six-week low at 0.8122. The dollar also benefited from a generally upbeat attitude towards the US economic recovery, which was reinforced following Monday’s better than expected ISM Non-Manufacturing PMI.

Turning to today, the US ADP Non-Farm Employment Change figure may generate significant market volatility. The figure is considered a valid predictor of Friday’s all-important Non-Farm Payrolls report, and investors will be carefully watching the indicator for clues as to the current state of the US employment sector. US employment has seen steady gains in recent months. If today’s figure shows additional growth occurred in February, the dollar may be able to extend its recent bullish trend. That being said, a worse than expected figure may generate doubts in the US economy and weigh down on the USD.

EUR – Greek Debt Fears Once Again Turn EUR Bearish

The Greek debt crisis once again weighed down on the euro during yesterday’s trading session. The common-currency dropped as low as 1.3129 against the USD to reach a two-week low. Additionally, the EUR/JPY dropped over 160 pips over the course of the day, reaching as low as 106.17 before staging a mild upward correction. Analysts attributed the bearish euro to fears that Greece will not be able to successfully complete a debt-swap before the end of this week. Greece needs to complete the debt swap before it is able to receive a bailout it needs to avoid defaulting on its debt later this month.

Turning to today, euro traders will want to continue paying attention to any announcements out of the euro-zone. Without definitive evidence that the Greek debt situation will improve, analysts are warning that riskier assets, like the euro, may remain bearish for the foreseeable future. That being said, should positive euro-zone news be released today, risk taking will likely increase and the euro may be able to regain some of its recent losses. Additionally, euro traders will want to pay attention to US employment news set to be released later today. A positive figure may result in the dollar gaining further on the common-currency.

JPY – Safe-Haven Yen Gains amid Risk Aversion

The Japanese yen moved up against most of its main rivals yesterday, as risk aversion in the marketplace caused the currency to recoup some of its recent losses. Ongoing fears regarding the euro-zone debt crisis brought the EUR/JPY close to the 106.00 level during European trading. Meanwhile, against the US dollar, the yen gained some 75 pips before staging a correction during the afternoon session.

Today, the US ADP Non-Farm Employment Change figure may result in significant volatility for the yen. Should the figure come in above expectations, the USD/JPY may reverse yesterday’s downward trend. Additionally, a better than expected US employment figure may lead to an increase in risk taking, which could benefit the euro against the JPY. At the same time, if pessimism in the Greek debt situation remains today, safe-haven currencies like the yen may continue to gain.

Crude Oil – Euro-Zone Fears Continue to Bring Oil Lower

The price of crude oil continued to drop yesterday, as the euro-zone debt crisis has once again caused investors to revert to safe-haven assets. Tensions in the Middle East, which until recently have kept the price of oil abnormally high, appear to have calmed down for the moment. While the dispute over Iran’s nuclear program have yet to be resolved, the prospect for another war in the region appears to be decreasing for the time being. The price of oil dropped below $105.00 a barrel during European trading yesterday as a result of the news.

Today, the price of oil may continue to fall providing a key US employment indicator shows improvement in the US economy and boosts the USD. A bullish USD typically means that oil, which is priced in dollars, becomes less attractive to international buyers and drops in value. That being said, any positive euro-zone news could result in increased risk taking in the marketplace and boost oil prices.

Technical News

The daily chart’s Williams Percent Range has dropped into oversold territory, indicating that the pair could see some upward movement. That being said, most other technical indicators place this pair in neutral territory. Traders may want to take a wait and see approach, as a clearer trend is likelier to present itself in the near future.
Most long term technical indicators show this pair range trading at the moment. The weekly chart’s Relative Strength Index is at 50, while the Williams Percent Range on the same chart has dropped below -20. Taking a wait and see approach for the pair may be the best option.
Long term technical indicators show this pair may have finally hit overbought territory following weeks of upward movement. The weekly chart’s Slow Stochastic appears to be forming a bearish cross, while the Williams Percent Range is currently at -10. Traders may want to go short in their positions.
Technical indicators on the daily chart show this pair may move into overbought territory in the near future. The Williams Percent Range is hovering close to the -20 level, while the Slow Stochastic may be forming a bearish cross. Traders will want to keep an eye on these two indicators for signs of impending downward movement.

The Wild Card

A bullish cross appears to be forming on the daily chart’s Slow Stochastic, indicating that upward movement could occur in the near future. Additionally, the Relative Strength Index on the 8-hour chart is in oversold territory and angling upward. Forex traders may want to go long in their positions ahead of an upward breach.

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