Euro-Zone News Set to Impact Markets Today

The US dollar was able to reverse some of its recent losses during the afternoon session yesterday, following the release of the Existing Home Sales figure. While the figure came in below expectations, it was still taken as a sign that the housing market in the US is improving. Turning to today, the marketplace could see some volatility as significant British and euro-zone news is set to be released. Traders will want to note the results of the British Retail Sales figure and a speech from the ECB President. Should either of them turn out to be positive, there may be an increase in risk taking throughout European trading.

Forex Market Trends

Daily Trend up no up down up up
Weekly Trend up up no down down up
Resistance 1.3320 1.5945 84.10 0.9145 1.0480 0.8435
1.3300 1.5925 83.90 0.9165 1.0460 0.8405
1.3270 1.5895 83.60 0.9135 1.0430 0.8375
Support 1.3210 1.5835 83.00 0.9075 1.0370 0.8315
1.3180 1.5805 82.70 0.9045 1.0340 0.8285
1.3160 1.5785 82.50 0.9025 1.0320 0.8265

Economic News

USD – Housing Data Boosts Dollar

The US dollar saw gains against several of its main rivals yesterday, as investors took recent higher US treasury yields and housing data as evidence that the US economic recovery is continuing. Despite the fact that the US Existing Home Sales figure came in below analyst forecasts, the number still represented a significant improvement from this time last year.

Against the Swiss franc, the dollar moved up over 60 pips throughout the European session, reaching as high as 0.9145 before staging a mild downward correction. The EUR/USD, which had been trading steadily for most of the day, tumbled during the afternoon. By the end of European trading, the pair was down close to 100 pips, reaching as low as 1.3178.

Turning to today, several pieces of news are forecasted to generate volatility for the greenback. Traders will want to note the results of the weekly US Unemployment Claims figure, scheduled to be released at 12:30 GMT. Should the figure come in below forecasts, the dollar may be able to extend its bullish run as a result. Later in the day, a speech from the ECB President may impact the EUR/USD pair. Any pessimistic signs in the speech regarding the euro-zone economic recovery could help the dollar move up vs. the common currency.

EUR – Euro Tumbles vs. Main Currency Rivals

The euro saw a steep drop against its main currency rivals during the evening session yesterday. The EUR/USD, which had reached as high as 1.3283 earlier in the day, tumbled to 1.3178 by the end of European trading. The EUR/JPY fell some 80 pips during the afternoon session, reaching as low as 110.26 before staging a slight upward correction.

Analysts attributed the euro’s bearish trend to renewed worries regarding the debt situations in several countries in the region. Both Spain and Portugal may need to restructure their respective debts in the near future. Should this occur, it may trigger a fresh round of euro selling.

Turning to today, euro traders will want to pay careful attention to speech from the President of the European Central Bank, scheduled to take place at 16:00 GMT. The euro tends to see heavy volatility following speeches from the ECB President, and today is likely to be no different. Should the speech lead to renewed doubts in the strength of the euro-zone economic recovery, the common currency may drop as a result.

JPY – Yen Gains Broadly Amid Risk Aversion

The yen saw significant gains against both the euro and US dollar yesterday, as risk aversion in the market place caused investors to shift their funds to safe-haven currencies. The EUR/JPY dropped as low as 110.26 by the end of the European session, erasing the pair’s earlier gains. The USD/JPY, which earlier in the day approached an 11-month high, fell over 50 pips during the afternoon session before stabilizing at 83.65.

Turning to today, yen traders will want to pay attention to the weekly US Unemployment Claims figure, set to be released at 12:30 GMT. With analysts predicting today’s news to show ongoing improvements in the US employment sector, the yen could reverse yesterday’s gains against the dollar during the afternoon session.

Crude Oil – Crude Oil Spikes Following Surprise US Inventory Figure

The price of crude oil shot up yesterday, following an unexpectedly low US inventory figure. US crude oil inventories came in at -1.2M this week, significantly lower than the forecasted 2.4M. Investors interpreted the news as a sign of increased demand in the US, which led to a spike in prices. The commodity was up close to $1 during evening trading, reaching as high as $107.50 a barrel.

Today, crude oil traders will want to pay attention to both the US Unemployment Claims figure, and a speech from the ECB President. Should the unemployment number signal an improved labor sector in the US, demand for oil may go up which could further boost prices. That being said, if the ECB President’s speech implies that the euro-zone economic recovery has stagnated, riskier commodities like oil may drop as a result.

Technical News

In a sign that this pair could see a price shift in the near future, the Bollinger Bands on the daily chart are beginning to narrow. A bearish cross on the same chart’s Stochastic Slow indicates that downward movement could occur. Traders may want to short their positions ahead of a possible downward breach.
The Williams Percent Range on the weekly chart is currently at -20, indicating that downward movement could occur in the coming days. A bearish cross on the daily chart’s Slow Stochastic supports this theory. Going short may be a wise choice for traders ahead of a possible downward breach.
A bearish cross on the weekly chart’s Slow Stochastic indicates that the pair could see downward movement in the coming days. That being said, most other technical indicators are showing that the current bullish trend may continue. Traders may want to take a wait and see approach for this pair.
The Williams Percent Range on the daily chart is currently right around the -80 level, indicating that this pair could see an upward correction. At the same time, most other technical indicators are not showing a clear direction at this time. Taking a wait and see approach may be the wise choice for this pair.

The Wild Card

The daily chart’s Relative Strength Index has crossed over into overbought territory, indicating that a downward reversal may occur in the near future. A bearish cross on the same chart’s MACD/OsMA lends support to this theory. Forex traders may want to go short in their positions ahead of a possible downward correction.

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