US Core Durable Goods Orders Set to Generate Volatility

The euro was able to maintain its recent bullish trend vs. the US dollar yesterday, after smooth debt auctions from Italy and Spain helped boost confidence in the euro-zone economic recovery. The EUR/USD saw significant gains earlier in the week, following a speech from Fed Chairman Bernanke in which he commented that the US economy was not growing quickly enough. Today, the dollar will have an opportunity to recoup its recent losses when the US Core Durable Goods Orders figure is released at 12:30 GMT. Analysts are predicting that the figure will come in well above last month’s. If true, the greenback could see gains as a result.

Forex Market Trends

Daily Trend down down down up down up
Weekly Trend up up up down down up
Resistance 1.3400 1.6015 83.55 0.9130 1.0500 0.8440
1.3380 1.5995 83.35 0.9110 1.0480 0.8420
1.3350 1.5965 83.05 0.9080 1.0450 0.8390
Support 1.3290 1.5905 82.45 0.9020 1.0390 0.8330
1.3260 1.5875 82.15 0.8990 1.0360 0.8300
1.3240 1.5855 81.95 0.8970 1.0340 0.8280

Economic News

USD – Dollar Reverses Losses vs. JPY, AUD

While the US dollar was not able to reverse its recent bearish trend against the euro yesterday, it did see moderate gains against both the Japanese yen and Australian dollar. The USD/JPY moved up almost 70 pips during the European session, reaching as high as 83.37 before staging a minor downward correction. The pair eventually stabilized at 83.15.

The AUD/USD, which had reached 1.0556 toward the end of the Asian session, dropped close to 80 pips over the course of the day. Analysts attributed the aussie’s bearish movement to poor Chinese fundamental news, which has caused investors to revert back to safe-haven currencies.

Turning to today, traders will want to pay attention to the US Core Durable Goods Orders figure, scheduled for 12:30 GMT. The news may help the dollar recoup some of its recent losses against the euro. The EUR/USD spent much of yesterday’s session trading around the 1.3330. With analysts predicting that today’s news will come in substantially higher than last month’s figure, the dollar may be able to stage a bullish correction during European trading.

EUR – Euro-Zone Debt Auctions Help EUR Maintain Gains

The euro largely maintained its recent bullish trend during trading yesterday, following successful debt auctions from both Spain and Italy. Specifically, the auctions helped strengthen the euro vs. the dollar, which turned bearish earlier the week following comments from the US Fed Chairman. The EUR/USD reached 1.3385 during the European session, a fresh three-week high for the pair. Against the Japanese yen, the euro moved up close to 80 pips, reaching as high as 111.23 before staging a reversal.

Turning to today, the euro may see some volatility when the US releases its Core Durable Goods Orders figure at 12:30 GMT. Analysts are forecasting the figure to come in well above last month’s, which if true, could result in the euro giving up some of its recent gains vs. the greenback. Additionally, traders should note that the euro-zone is still in a very fragile state. Any negative announcements today, specifically regarding Portuguese debt, may weigh down on the common currency.

Gold – Gold Extends Bullish Run

Gold saw another bullish day yesterday, as investors continued to flock to riskier assets amid a weak US dollar. The dollar fell earlier in the week following comments from Fed Chairman Ben Bernanke, who said that the US economy is not growing as quickly as it needs to for the unemployment rate to drop further. Gold reached as high as $1696.78 during the European session yesterday, an increase of close to 4000 pips since the beginning of the week.

Turning to today, the price of gold will likely be determined by how well the dollar responds to US news later in the day. Gold, which is priced in dollars, typically falls when the USD strengthens. Should today’s news boost the greenback vs. the euro, riskier assets like gold could fall later in the day.

Crude Oil – Crude Oil Slides during European Trading

Expectations that US crude oil inventories increased over the past week caused the price of oil to slip during European trading yesterday. High inventories in the US are usually a sign of decreased demand in the world’s largest oil consuming country, which can lead to a drop in prices. Yesterday, crude fell as low as $106.50 a barrel before staging an upward correction during evening trading.

Turning to today, the official US Crude Oil Inventories figure, set to be released at 14:30 GMT, is likely to determine the direction the commodity takes. Analysts are predicting the figure to come in at 2.8M, which if true, could cause the oil to extend its bearish trend. That being said, last week’s figure came in well below expectations, which led to a spike in prices. Should a similar event occur today, oil may reverse its downward momentum.

Technical News

The Bollinger Bands on the weekly chart appear to be narrowing, indicating that a price shift could occur in the coming days. The Williams Percent Range on the daily chart is in overbought territory, signaling that the shift could be downwards. Traders may want to go short in their positions ahead of a possible bearish correction.
Most long term technical indicators show this pair in neutral territory, meaning that no major shift in price is expected at this time. That being said, traders will want to keep an eye on the MACD/OsMA on the daily chart. It looks like a bearish cross may be forming. If so, it may be a sign of a possible impending downward correction.
The weekly chart’s Relative Strength Index is hovering right around the overbought zone, indicating that this pair could see downward movement. This theory is supported by the Williams Percent Range on the same chart, which is currently at -20. Traders may want to go short in their positions ahead of a possible downward correction.
While the Williams Percent Range on the daily chart is currently in the oversold region, which is typically a sign of impending upward movement, most other technical indicators are in neutral territory at this time. Traders may want to take a wait and see approach for this pair, as a clearer picture may present itself later on.

The Wild Card

Nasdaq 100
The daily chart’s Relative Strength Index has drifted into the overbought zone, indicating that downward movement could occur in the near future. Additionally, the 8-hour chart’s Slow Stochastic has formed a bearish cross, lending further support to the theory of an impending bearish correction. Forex traders may want to go short in their positions today.

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