USD Maintains Gains to Start Off Week

The USD maintained its bullish trend yesterday, as strong employment data out of the US last week boosted investor confidence in the American economic recovery. The EUR/USD dropped as low as 1.3078 during the morning session yesterday, before staging a slight recovery. Meanwhile, the USD/JPY reached as high as 82.38 before dropping slightly during mid-day trading. The pair eventually stabilized around the 82.20 level. Today, traders will want to pay attention to a statement from the Fed. While the Fed is not forecasted to adjust US interest rates, the statement may give important clues as to the state of the US economic recovery.

Forex Market Trends

Daily Trend down down down up up down
Weekly Trend up down down down down up
Resistance 1.3289 1.5831 82.62 0.9217 1.0814 0.8484
1.3239 1.5777 82.17 0.9149 1.0734 0.8446
1.3209 1.5743 81.88 0.9107 1.0683 0.8422
Support 1.3158 1.5689 81.42 0.9039 1.0603 0.8384
1.3128 1.5655 81.14 0.8998 1.0552 0.8360
1.3077 1.5600 80.68 0.8930 1.0471 0.8321

Economic News

USD – Retail Sales Data May Help Boost Dollar Today

Investor confidence in the US economic recovery helped the USD maintain its gains from last Friday during yesterday’s trading session. US employment statistics released last week signaled continued growth in the labor sector, which helped the dollar move up against most of its main currency rivals. The EUR/USD spent much of yesterday’s trading session around the 1.3120 level, after falling as low as 1.3078. Against the British pound, the dollar saw additional gains yesterday. The GBP/USD dropped some 95 pips during European trading, before stabilizing around the 1.5615 level.

Turning to today, traders will want to pay attention to a batch of US data that could impact dollar pairs. The Retail Sales and Core Retail Sales figures, set to be released at 12:30 GMT, are both forecasted to show improvements over last month’s readings. If true, the dollar may be able to extend its bullish trend during the afternoon session. In addition, traders will want to note the FOMC Statement at 18:15 GMT. While the FOMC is not expected to make any changes regarding US interest rates, the statement will give investors an idea of the current state of the US economic recovery.

EUR – Pessimism in Greek Economy Keeps EUR Bearish

The euro maintained its recent bearish trend against the USD yesterday, as pessimism in Greece’s ability to successfully overcome its debt crisis caused investors to keep their funds with safe-haven assets. That being said, the common-currency did see gains against some of its riskier counterparts, including the AUD and GBP. The EUR/AUD moved up over 100 pips yesterday, reaching as high as 1.2525 during the evening session. The EUR/GBP shot up around 70 pips, reaching as high as 0.8416 before staging a slight reversal.

Turning to today, euro traders will want to pay attention to the German ZEW Economic Sentiment figure, set to be released at 10:00 GMT. As the largest economy in the euro-zone, German indicators tend to have a significant impact on the EUR. With analysts forecasting today’s news to come in well above last month’s, the euro may be able to recoup some of its recent losses during mid-day trading. Additionally, traders will want to note a speech from ECB President Draghi at 11:30 GMT. The euro could see volatility if Draghi mentions anything regarding the current state of the euro-zone economic recovery.

JPY – JPY Maintains Gains vs. Euro

The Japanese yen made gains on the euro yesterday afternoon, as uncertainty regarding several euro-zone economies sent investors to safe-havens. Despite positive news last week, regarding Greek’s ability to meet its debt obligations, investors are expressing uncertainty towards the overall strength of the euro. This uncertainty is made worse given the ongoing debt problems in Portugal and Spain. As a result, the EUR/JPY spent most of the day trading around the 107.60 level.

Turning to today, traders will want to pay attention to a batch of news out of the US. Should the Retail Sales and Core Retail Sales figures show additional growth in the US economy, the yen may extend its bearish trend vs. the greenback. Additionally, the FOMC statement may boost confidence in the US economy, which could lead to further yen losses.

Crude Oil – Crude Oil Remains Steady, But May See Drop

Following last week’s gains, crude oil remained steady throughout yesterday’s session. Taking into account a number of global indicators, some analysts are wondering if the price of crude may have peaked. Recent news out of China regarding its shrinking manufacturing sector and overall weakened growth rate has pushed down demand for crude oil. Countries across Europe have also been reporting a shrinking demand for oil, which could inhibit any further rise in price.

Turning to today, traders will want to continue monitoring any developments out of the euro-zone which could impact risk taking. Any signs of euro-zone growth, particularly when the ECB President gives a speech at 11:30 GMT, may cause higher yielding assets like oil to spike during the afternoon session.

Technical News

The Relative Strength Index on the daily chart has dropped into oversold territory, indicating that upward movement could occur in the near future. That being said, most other long-term indicators place the pair in neutral territory. Taking a wait and see approach for the pair may be a wise choice.
While the Williams Percent Range on the daily chart has entered the oversold zone, which means that upward movement could occur, most other technical indicators are inconclusive at this time. Traders will want to keep an eye on indicators like the Slow Stochastic and Bollinger Bands on the daily and weekly charts, as a more defined trend may present itself in the near future.
Following the spike the pair saw to close out last week’s session, technical indicators now show that downward movement could occur in the coming days. The Slow Stochastic on the daily chart has formed a bearish cross, while the Relative Strength Index on the weekly chart has entered overbought territory. Going short may be the wise choice for this pair.
The Bollinger Bands on the weekly chart have begun to narrow, indicating that a price shift could occur in the coming days. The Relative Strength Index on the daily chart, which has crossed into overbought territory, shows that this shift could be downward. Traders may want to go short in their positions.

The Wild Card

The 8-hour chart’s Slow Stochastic has formed a bullish cross, indicating that the pair could see upward movement in the near future. Furthermore, the daily chart’s Williams Percent Range has dropped well into oversold territory. Forex traders may want to go long in their positions for this pair.

Written by