Markets Set to Pick Up With US News Today

Following a relatively mild day in the marketplace yesterday, a batch of US news is forecasted to generate volatility today. The US Building Permits figure, set to be released at 12:30 GMT, is forecasted to come in slightly above last month’s figure. If true, the dollar could see gains against its main currency rivals during the afternoon session. In addition, a speech from Fed Chairman Bernanke may give investors some clues as to the current state of the US economy. Any positive signs from the Fed Chairman could help the greenback.

Forex Market Trends

Daily Trend up up down down down up
Weekly Trend up up down down down up
Resistance 1.3346 1.5948 84.13 0.9265 1.0689 0.8417
1.3281 1.5896 83.70 0.9209 1.0633 0.8385
1.3241 1.5866 83.43 0.9174 1.0598 0.8366
Support 1.3176 1.5815 82.98 0.9118 1.0541 0.8334
1.3137 1.5785 82.71 0.9083 1.0506 0.8314
1.3072 1.5734 82.27 0.9027 1.0449 0.8282

Economic News

USD – USD Takes Losses in Slow Trading Day

The US dollar dropped vs. some of its main currency rivals yesterday, as a low liquidity environment led to some erratic market movements. The EUR/USD broke above the 1.3200 level during the afternoon session, as a poor US CPI figure from last week continued to weigh down on the greenback. Meanwhile, the USD/JPY dropped some 50 pips during the morning session before staging a recovery later in the day. The pair eventually stabilized around the 83.30 level.

Turning to today, the dollar may have an opportunity to recoup some of yesterday’s losses as several pieces of significant US news are set to be released. The US Building Permits figure is forecasted to come in at 0.69M. If true, it would represent a slight improvement over last month’s figure and would be yet another sign of an improvement in the US economy. Additionally, a speech from Fed Chairman Bernanke is expected to give investors clues as to the current state of the US economy. Following the disappointing US data from last week, positive comments from the Fed Chairman could give the dollar a boost during afternoon trading.

EUR – EUR Sees Gains vs. USD, JPY

The euro extended its upward trend vs. the dollar during yesterday’s session. Following very little movement during the morning session, the EUR/USD shot up over 50 pips during afternoon trading, and breached the 1.3200 level. Analysts attributed the spike to last week’s worse than expected US CPI figure, which generated doubts that the Federal Reserve would increase US interest rates earlier than forecasted. Against the safe-haven yen, the euro was able to recover after taking some losses during the Asian session. The EUR/JPY moved up some 75 pips during mid-day trading.

Turning to today, the euro may reverse some of its gains against the dollar if the US Building Permits figure comes in as forecasted. Building permits are considered a key indicator of overall economic health, and a positive figure may help strengthen the dollar after its most recent bearish trend. At the same time, should the US news come in below expectations, the euro may be able to move up further against its safe-haven currency rivals.

JPY – JPY Takes Losses vs. Riskier Currencies

The euro made significant gains against the yen on Monday as the Japanese currency continues to be weighted down by BOJ monetary policy. The EUR/JPY bounced back to the 110.08 mark on Monday evening, marking a five month high for the EUR/JPY pair.

Also gaining on the yen Monday was the Australian dollar. The AUD/JPY dropped as low as 87.84 during morning trading, but was able to stage a recovery later in the day. Following last month’s decision by the Bank of Japan to inject millions of yen into the economy, the yen has been consistently dropping against several currencies. Many analysts had predicted that we would see some resurgence from the yen but so far those predictions have turned up incorrect.

As we move into the end of March, we will see the business year end for Japan. Traditionally, this time of the year sees an increase in foreign investment in the Japanese economy. If the past repeats itself in this regard, we may well see the yen bounce back from its recent slump.

Crude Oil – Crude Oil on the Rise

Crude oil saw significant gains on Monday and closed in on its highest mark since last week, trading near 108.23 for most of the day. Following last week’s lackluster CPI figure from the US, the dollar saw losses against several of its currency rivals. This in turn has led to an increase in oil purchases given the relative affordability for international investors.

Heading into tomorrow, the U.S. will be releasing building permit numbers which could offer a chance for the greenback to redeem itself. Any increase in the value of the dollar could push back crude oil and reverse its current bullish trend.

Technical News

Most long-term technical indicators show this pair range-trading, meaning that no significant movements are forecasted at this time. That being said, traders may want to take a wait and see approach, as a clearer picture may present itself in the near future. The daily chart’s Williams Percent Range, which is trending upward at the moment, may eventually reach overbought territory. In such a case, a bearish correction could occur.
The weekly chart’s Williams Percent Range is currently hovering in the overbought zone, indicating that a bearish correction could occur in the coming days. A bearish cross on the daily chart’s MACD/OsMA lends further support to this theory. Traders may want to go short in their positions.
A bearish cross on the weekly chart’s Slow Stochastic indicates that a downward correction could occur in the near future. Furthermore, in another sign that the pair could move down, the daily chart’s Williams Percent Range is currently at -20. Going short may be the wise choice for this pair.
A narrowing of the Bollinger Bands on the weekly chart indicates that a price shift could occur in the coming days. That being said, most other technical indicators are not showing a clear picture as to which direction the shift could be. Traders may want to take a wait and see approach for this pair.

The Wild Card

Nasdaq 100
The Relative Strength Index on the daily chart has entered the overbought zone, indicating that downward movement could occur in the near future. The Williams Percent Range on the 8-hour chart is also trading in overbought territory, lending further support to the theory that a downward correction could take place. Forex traders may want to short their positions.

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