The USD was able to stage a recovery during yesterday’s trading session following two economic indicators showing an increase in US production last month. Yesterday’s Core Durable Goods Orders figure, considered a leading indicator of production in the US, came in at 1.6%, well above last month’s -3.0%. Following the news, the dollar moved up against several of its main currency rivals, including the yen and euro. Turning to today, traders will want to pay attention to the weekly US Unemployment Claims figure. A positive result could help the dollar extend its recent bullish trend.
Forex Market Trends
USD – Unemployment Claims May Help Dollar Extend Gains
After spending the first part of the week stuck in a bearish cycle, the dollar was able to stage a recovery during yesterday’s trading session. The US Core Durable Goods Orders figure, which came in significantly better than last month’s, helped the greenback reverse its bearish trend against both the yen and euro. The USD/JPY, which had dropped as low as 82.59 during the Asian session, spent most of the day moving up. The pair reached as high as 83.16 before staging a mild reversal during the late afternoon.
The EUR/USD, which had spent the first part of the week in an uptrend, tumbled during the afternoon session yesterday. The pair dropped from a daily high of 1.3372, falling as low as 1.3297 before staging a reversal during the evening session.
Turning to today, the US Unemployment Claims figure is likely to be the highlight of the trading day. The labor sector in the United States has seen steady gains in recent months, and has led to an increase in optimism regarding the economic recovery. Should today’s figure come in at or below the forecasted 351K, the greenback may continue moving up as we begin to close out the week.
EUR – EUR Sees Mixed Trading Day
After spending the first part of the week in a bullish trend, the euro saw a mixed trading session yesterday against its main currency rivals. Against the US dollar, the common currency spent most of the afternoon session trading below the 1.3300 level. Overall, the EUR/USD was down some 75 pips for the day. That being said, the euro was able to extend its recent gains against the Australian dollar, which has been adversely affected by recent Chinese news. The EUR/AUD reached as high as 1.2833 before stabilizing around 1.2815 during the evening session.
Turning to today, euro traders will want to pay attention to any announcements out of the euro zone, particularly in regards to the current debt situation in Portugal. Portugal is widely seen as the next euro-zone country that will need to restructure its debt. Any negative news may turn the euro bearish. In addition, the weekly US Unemployment Claims figure may lead to further euro losses against the dollar, providing the figure comes in as expected.
JPY – JPY Moves Up Against Riskier Currencies
The end of the Japanese fiscal year, typically a time when a large amount of liquidity is injected into the Japanese economy, led to gains for the yen during yesterday’s trading session. The EUR/JPY fell over 90 pips over the course of the day, reaching close to the 110.00 level during the afternoon session. The GBP/JPY saw an even steeper drop. The pair fell well over 100 pips yesterday, reaching as low as 131.25 late in the afternoon.
Turning to today, a relatively slow news day means that the yen may be able to extend its bullish trend, especially against riskier currencies like the euro. That being said, the US Unemployment Claims figure could lead to JPY losses vs. the greenback, providing the indicator shows continued growth in the US employment sector. Traders will want to pay attention to the figure. Should it come in at or below the expected 351K, the USD/JPY could move up.
Crude Oil – Crude Oil Tumbles Following US Inventories Figure
Risk aversion in the market place combined with a significantly higher than expected US Crude Oil Inventories figure, led to a major drop in the price of oil during yesterday’s trading session. The US inventories figure came in at 7.6M, well above the forecasted 2.8M. Typically, a high inventory means that there is less demand in the US, which can lead to a drop in price. The price of oil fell almost $2 a barrel, reaching as low as $104.88 before stabilizing at $105.20.
Turning to today, the price of oil may be influenced by the weekly US Unemployment Claims figure, set to be released at 12:30 GMT. Should the figure show continued growth in the US labor sector, the USD could see gains as a result. In such a case, crude oil may drop further ahead of markets closing for the week.
A bearish cross on the daily chart’s Slow Stochastic indicates that the pair may see downward movement. This theory is supported by the Williams Percent Range on the daily chart, which is currently at -20. Going short may be a wise choice for this pair.
Most long term technical indicators show this pair trading in neutral territory, meaning that no major movements are forecasted at this time. Traders may want to take a wait and see approach, as a clearer picture may present itself in the coming days.
Both the Relative Strength Index and Williams Percent Range on the daily chart have moved into the overbought zone, indicating that the pair could see downward movement in the coming days. Traders may want to go short in their positions ahead of a possible bearish correction.
The daily chart’s Williams Percent Range is currently in oversold territory, indicating that the pair could see an upward correction in the near future. In addition, the Slow Stochastic on the same chart has formed a bullish cross. Going long may be the wise choice for this pair.
The Wild Card
The Bollinger Bands on the daily chart are narrowing at the moment, indicating that a price shift could occur in the near future. The Slow Stochastic on the same chart, which has formed a bearish cross, shows that the shift could be downward. Forex traders may want to go short in their positions ahead of a possible downward breach.
Written by Forexyard.com